Trader Asks: Does IG Know Something Everything Else Doesn’t?

By Kevin Muir of “The Macro Tourist” fame; reposted here with permission The US stock market is on fire. The American economy is clipping along at the best pace in a long while. Financial conditions are still easy. Not surprisingly, high-yield bond spreads are within spitting distance of recent tights (lows). This is all to be expected in an environment of economic expansion. Investment-grade not playing ball As a macro guy, there is nothing unexplained with this picture. But I mu

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4 thoughts on “Trader Asks: Does IG Know Something Everything Else Doesn’t?

  1. I got some macro commentary recently about money flowing out of EM bonds into US high yield. They are seeking safety from the EM rout but need to still earn a decent yield. This could be a factor compressing yield spreads in favour of high yield. Another piece in the jigsaw maybe?

  2. LQD ( i shares investment grade etf) is geared to financial and consumer cyclical sectors while low exposure to energy.

    HYG ( i shares high yield etf) is geared to communication and energy while low exposure to financial.

    Is it a battle of interest rates and the likelihood of higher oil prices?

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