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Bloomberg
Premiums for low-rated corporate bonds increased by more than 2%, a signal that has been used to predict the crisis since 1970.
An indicator of recession risk with a "pretty good" record in The past 50 years have just launched an alarm signal, according to the Leuthold Group
For the first time in recent years the recession of 2007-2009, the premiums of the segment of US corporate bonds in rank The investment grade with the lowest credit ratings rose to 2% after being below that level, according to data compiled by the research group based on in Minneapolis. The badysis examines the difference in return between corporate debt with Baa's rating by Moody's Investors Service and US Treasury bonds maturing in 10 years.
"We do not know why a credit differential of 2% has been so prophetic regarding recessions since 1970 ," wrote Jim Paulsen, head of investment strategy at Leuthold, in a note to customers on Monday. This has happened during or before six of the last seven recessions, he added.
Similarly, Paulsen recognizes that other indicators of the risk of recession do not give the same signal. One of the best known is a reversal of the yield curve of US Treasury bonds, when the yields of two-year bonds exceed those of marketable bonds with a maturity of 10 years, but This has not happened yet. In addition, Paulsen's premium for speculative-grade securities was well over 2% for most of the period of economic expansion since the end of the Great Recession.
To Take Into Account [19659004] "In the past 50 years, this less-watched indicator has had to do with the risk of a recession that is good enough that it is not ignored. below-average economic recovery is supported by unconventional monetary policy and fiscal stimulus, it would be shocking to end before traditional recession indicators give warning, "writes Paulsen
. Fear of the acceleration of inflation and the pace of interest rate hikes by the Federal Reserve have affected corporate bonds at a level of investment up here this year In addition, US companies are taking more loans and their interest charges are increasing
The gap between the Moody's Corporate Baa Bond index and Treasury bonds American with expiratio n in 10 years rose to 2% on June 28 according to data compiled by Bloomberg. Friday, it was 1.96%.
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