By Matt Tracy
(Reuters) – U.S. corporate bond spreads, the premium over Treasuries that companies pay for debt, are starting to recoup some lost ground after recent strong economic data increased hopes for interest rate cuts and calmed recession fears.
Investment-grade corporate bond spreads on Wednesday tightened by 3 basis points to 105 basis points (bps), according to the ICE BofA Corporate U.S. Corporate Index.
Junk bond spreads finished Wednesday at 346 bps, also 3 bps tighter this week, according to the ICE BofA High Yield Index.
Both high-grade and junk bond spreads retraced much of early August’s dramatic widening, after surprisingly weak July jobs and productivity reports prompted concerns of a sharp economic downturn and potential recession.
Economic data this week appears to have calmed recession fears. U.S. consumer prices in July rose at their slowest pace in nearly 3-1/2 years, while the cost of services fell by…
