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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