Summary
Treasury bond yields have been rising in recent weeks as concerns over inflation have returned since the election. Meanwhile, corporate bond yields have headed higher as well, but not as rapidly as Treasury yields (as fixed-income investors are less concerned about a slowing economy and potential recession). As a consequence, spreads between corporate and Treasury bond yields have narrowed. The spread between AAA-rated corporate bonds and 10-year government bonds in November was 78 basis points (bps), below the 35-year average of 122 bps and down about 30 bps from August. The gap between the government 10-year bond yield and a BAA-rated bond (still investment grade) in November was 142 basis points, below the historical average spread of 229 bps and down about 40 bps in the past three months. We watch these spreads closely for a couple of reasons. First, from an asset-allocation standpoint, tight corporate bond spreads signal that corpo
Source: finance.yahoo.com