Merrill HY Index effective yield (source: St. Louis Fed) |
Even emerging markets corporate HY bond yields are near all-time lows.
Merrill Emerging Markets Corporate HY Index effective yield (source: St. Louis Fed) |
In fact credit looks highly overpriced relative to US equities. And equities are not exactly cheap at this stage, particularly given some 2% GDP growth expectations in the US. Goldman's relative value model now shows corporate credit at the richest levels in at least three decades.
Source: GS |
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