(Bloomberg) — US investment-grade corporate bond spreads have narrowed to the lowest level in more than three years, a clear sign of just how bullish credit investors are even as macro and geopolitical risks mount.
Average high-grade bond spreads — the added premium over US Treasuries that investors get paid to hold riskier debt — narrowed four basis points to 83 at Friday’s close, the tightest level since September 2021, according to data compiled by Bloomberg.
Strong demand from investors fleeing from Treasuries into short and intermediate investment-grade bonds, the Federal Reserve’s expected rate cuts and a slowdown in bond issuance are all helping keep the spreads tight.
That’s in contrast to the rise in volatility measures including the VIX Index — a measure of Wall Street fear — and a blowout payrolls report Friday, “reflecting a market perhaps reluctant to reprice,” according to Bloomberg Intelligence…
