Here’s another graph showing how investors are willing to take on more risk. This shows the spread between the yield on the 10-year Treasury bond and the yield on BofA Merrill Lynch US Corporate BBB Index.
Late last year, the spread was over 280 basis points. This means that investors were demanding extra incentive to buy riskier assets. Since then, the spread has narrowed to 180 basis points. That’s a dramatic change in just a few weeks.
Before the financial crisis, the spread was often around 120 basis points. Last spring, the spread got that low again but started to rise over the summer as fear increased during the debt ceiling debate and renewed fears in Europe.
Posted by Eddy on March 27th, 2012 at 11:23 am
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Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 for the last five years in a row. (more)
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