S&P 500 Index and Yield Spread (A-Rated vs. Junk Bonds) When yield spreads between A-rated and junk bonds widen, the S&P 500 tends to fall. Therefore, it serves as a crucial leading indicator to closely monitor. Image: Real Investment Advice
Proportion of U.S. Junk Bonds Maturing Within Four Years A third of the $1.2 trillion U.S. junk bonds matures in the next four years. This proportion is highest in decades. Image: Bloomberg
Correlation – CCC vs. BBB-rated U.S. Corporate Bonds Investors rush into junk bonds. Is it time to worry? Image: Arbor Research & Trading LLC
Corporate Bonds – Share of Market Value in Bloomberg Barclays USD IG (AAA, AA, A, BBB) Credit quality is deteriorating, as the amount of BBB-rated bonds, one step away from junk bonds, has doubled since 1990. Image: Deutsche Bank Global Research
Corporate Bonds: IG Downgrade to HY and BBB Share of U.S. IG Market This chart highlights the resilience of BBB-rated bonds. BofA believes that there is little risk that IG ratings will fall to junk status in the next recession. Image: BofA Global Research
Cyclicals to Defensive Stock Ratio and Treasury Bonds Market internals, the preference for large over small and quality over junk, suggest that the recovery will be modest. Image: Morgan Stanley Research
U.S. High Yield – % $HY Negative Real Yield How long will U.S. junk bonds with negative real yields last? Image: Deutsche Bank
Asia/U.S. High Yield Bond Spread Asian junk bonds look attractive relative to U.S. junk bonds. Image: Morgan Stanley Wealth Management
Annual Proceeds from High-Yield U.S. Corporate Bond Sales Are investors at risk of making poor investment decisions by rushing into junk bonds? Image: Financial Times
Duration in Investment Grade and High Yield Corporate Bond Indices While yields on junk bonds are at record lows, average durations have been shortening for HY bonds and increasing for IG bonds since the 2000’s. Image: Deutsche Bank Global Research
Share of Market Value in Bloomberg Barclays USD IG Since 1990, the amount of BBB-rated bonds has doubled. This is only one step away from junk bonds. Keep in mind that many investment grade investors own BBB-rated bonds, but they are not allowed to hold junk-rated bonds. So, any drop in the credit ratings could…