High Yield Bond Spreads 'Officially' In Crisis Mode

I follow the spread between BBB (the highest investment grade) corporate debt and Treasuries as a gauge of overall investor willingness or unwillingness to accept risk. Lately, investors have been less and less willing to accept risk, plowing money into Treasury bonds and lowering their yield.

The spread is now 296 basis points, which is close enough to my 3% trigger to call this an “official” crisis. Such events tend to happen only once or twice per decade. As a general rule, they have typically signaled good times to be in risky assets such as stocks.