Since credit spreads are one of the best indicators of economic confidence, with generally - widening credit spreads signifying declining confidence and generally -
narrowing credit spreads signifying rising confidence, it would be logical if there were a positive correlation between the gold / commodity ratio and credit spreads.
Further, the WSJ rather strangely
cites narrowing credit spreads, smaller differences between what corporate bonds and risk - free treasuries pay, as further evidence of deflationary expectations.
Narrowing credit spreads hint at increased risk tolerance The improved outlook for economic growth led to a drop in high yield credit spreads during the quarter.
Given the relatively low - rate environment and
narrow credit spreads, we continue to expect few opportunities for mispriced risk in credit markets.
A narrow credit spread indicates high expectations for the economy and corporate world.
This combination of zero real yields and
narrow credit spreads has meant the Founder's Fund holds more cash in lieu of bonds.
Regardless, there are many catalysts: a tight labor market, wage growth picking up, a stock market at or near record highs, housing values rising quickly, high commercial real estate prices, low cap rates and
narrow credit spreads.