The Yield Curve Leads Volatility by Three Years

The Yield Curve Leads Volatility by Three Years Is more volatility expected ahead? Yes, most likely. The CBOE Volatility Index or VIX usually follows the U.S. 10-year vs. 3-month Treasury spread (inverted) with a 3-year lag. See also “VIX is in a Transitory State.” Picture source: ClearBridge Investments

U.S. High-Yield Credit Spreads

U.S. High-Yield Credit Spreads High-yield credit spreads are still below recession level (red line). A widening high-yield spread remains a useful indicator for predicting a coming recession in the current interest rate environment. See also “A Widening of Credit Spreads Is Very Useful to Predict a Recession“

U.S. High Yield

U.S. High Yield Credit spreads are fine. Could the market go wrong by predicting significant interest rate cuts? Picture source: Fidelity Investments