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Is Junk-Bond Market Priced To Perfection?

Published 05/13/2014, 10:30 AM
Updated 07/09/2023, 06:31 AM

The Junk-Bond Complex

Junk bond mutual funds are now nearing resistance levels at (1), which has kept them from moving higher for the past 10-years. In the past when these resistance lines were hit, it represented a peak for the junk market and stocks peaked around the same time, too.

The adjusted spread on the high-yield complex is now near the levels hit in 2000 and 2007 at (2) above -- a level where Junk and stocks peaked in the past. For more details on the Adjusted spread...see here

Is the junk-bond market priced to perfection? Defaults in this complex have been pretty much zero for the past 18 months.

Does it get any better than that? 

Humbly I feel junk is acting a little too perfect of late...I'm keeping a close eye on them.

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