jahowle

High Yield Credit Spreads at Post Bear Stearns High

Not an eye opening observation. What should be taken away from this graph is the fact that credit spreads are continuing to widen and will probably do so until they take out the July 15th low in the inverterd chart. Because the common is simply a long term option on the assumed future cash flows and are junior to the bonds they should be more volatile and lead the turns in the market.