There is an unsettling technical explanation for the perverse behaviour of the bond markets over recent weeks
The junk bond market is euphoric. Funds are happily mopping up the weakest CCC-rated corporate debt in the US as if there was no tomorrow, compressing risk spreads to levels that surpass the giddiest days of the pre-Lehman debt bubble.
The spread on BBB-rated debt has fallen to a record 1.11pc.
Meanwhile, Bank of America says the trailing price-to-earnings ratio for the S&P 500 index on Wall Street is also at an all-time high of 29.8, topping the dotcom peak in 1999.
Ambrose Evans-Pritchard Telegraph 13 July 2021
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