Not exact matches
«Liquidity,» in fact, is THE watchword now in
bond trading — ironic, considering that the U.S. central bank's primary intention has been to boost the flow of cash through financial markets, drive a
push toward riskier assets like stocks and corporate credit, and thus generate a wealth effect that would
spread through the economy.
The resulting increase in corporate
bond issuance has
pushed up swap
spreads, with the
spread on US 10 - year (bank / government) swaps, for example, recently at its highest level for several years (Graph 7).
The divergence between CDS
spreads and actual high yield
bond yields show that the
bond market has not followed CDS
spreads movements due to the appetite for yield supporting the high yield market and
pushing bond yields down.
With so many investors flocking to junk
bonds, their prices have risen -
pushing down their interest rates and narrowing the
spread between risky and safer
bonds.