Coprorate vs Treasury Spread

posted by Nima

June 5, 2010 · Posted in Investing 

Since the beginning of April, the price of Treasury Bonds has risen while that of corporate bonds has dropped. The action has, once again, been a good predictor of the recent weakness in equities.

corporate-bonds-vs-treasuries-06-05-2010

As I noted in September last year: Keep an eye on the bond market.

corporate-bonds-vs-treasury
Click on image to enlarge.

The question is where are corporate yields headed and where are Treasury yields headed. So long as the spreads remain flat or continue to narrow, stocks will probably move sideways or spike up a little more.

The time of flattening spreads seems to be over for now … what this means for equities is obvious.

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