Low Spread Between Corporate and Treasury Bonds is Good for the Market

by: William Trent, CFA

The spread between corporate and treasury bonds has been holding steady near its long term (since-1962) average, but toward the low end of the more recent history. The low spreads should be positive for the stock market and capital spending, as it reduces the cost companies pay for capital.

We’d hate to see what the market and capital spending would look like if the spread widened.