As of Thursday night, July 18, 2024, only 70 companies had reported Q2 ’24 earnings results, so the sample size is still a little small to draw larger conclusions about
All else being equal, gradually-tightening corporate high-yield credit spreads imply a US economy that remains in reasonably-good shape. Obviously, corporate sector spreads, are a better signal, but that average high-yield spread implies employment, income and spending should remain in line with where they have been the last few years, or maybe a better way to say it is, that the corporate high-yield credit market is not yet forecasting impending doom.
To give readers some perspective, +309 is the tightest high-yield credit spread I’ve seen tracking the data , and +400 has been the widest spread, which occurred during that period of weak economic data in Q4 ’23, as theIf the 10-year Treasury yield trades below 4%, watch how high-yield credit spreads respond, since it could be telling readers that there is more happening in the US economy than just the “disinflation” trade.