In low interest rate environments
with narrow credit spreads, preferred stocks behave similarly to bonds.
Not exact matches
Finally, it was a banner year for
credit,
with spreads narrowing across investment grade, high yield and emerging markets.
The more recent
narrowing of
credit spreads might also be consistent
with concerns about Y2K abating in financial markets, as participants have become more confident about their preparations (Graph 32).
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.
Credit spreads confirm the speculative nature of this market
with spreads narrowing 12 basis points over the last month.
It would make sense for business entities to «borrow for longer»
with private capital crowded out by central banks now clamor for long - term cash flows, and this dynamic has tightened
credit spreads to record
narrow levels.
The
spread between the yields of bonds
with different
credit quality generally
narrows when the economy is improving and widens when the economy weakens.
In comparison
with the S&P 500, S&P 500 Quality is exposed to industrial production and the
narrowing of
credit spreads.
Finally, it was a banner year for
credit,
with spreads narrowing across investment grade, high yield and emerging markets.