Corporate bonds now yield only 0.12% above the Fed Funds rate.

0,12 %, den överavkastning som företagsobligationer ger nu är endast 0,12 % över Fed Funds-räntan. Det är den lägsta nivån sedan 2007, före den globala finanskrisen.

0.12%, the excess return on corporate bonds is now only 0.12% above the Fed Funds rate. This is the lowest level since 2007, before the global financial crisis.

Each time credit spreads were at historically suppressed levels, a hard landing scenario followed. Maybe this time is indeed different, but I would rather base my perspective on many indicators that point to an impending severe recession. The profound issue of yield curve inversions is another example. Recently, over 90 percent of the fiscal curve was inverted, a measure that has accurately predicted every major economic downturn in the last 50 years.

In addition, the Fed’s policy stance should also be considered.

As we have learned repeatedly throughout history, monetary policy tightening works with a lag and we have not yet seen a significant credit crunch that could lead to further economic problems.

Even the apparent strength of the labor market should be taken with some caution.

Historically low unemployment rates have served as one of the most reliable counter-indications in history.

Either these macro indicators are on the verge of being proven wrong, or the overall stock valuations are completely out of line.

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