High Yield Credit Is Expensive
Credit spreads have returned to low levels, clearly indicating the end of the recession caused by the period of lockdown. According to our „time series“ valuation indicators, investment grade and high yield risk premia are expensive in absolute terms, but were also the most expensive of the growth-related risk premia at the end of August. This signal is not very strong, but the credit/equity spread is beginning to become significant (close to 1 standard deviation).
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