The gap or spread between high yield debt (junk bonds) and investment grade corporate bonds is now the most narrow it has been since 2007. And what happened in 2007? A number of hedge funds owned by former famous investment bank, Bear Stearns, started failing thanks to too many bad (over leveraged) bets on subprime housing and mortgage backed securities.
The Inverse Relationship Between Interest Rates and Bond Prices https://www.investopedia.com/ask/answ...
Fed Prepares to Go Direct with Liquidity https://www.theinstitutionalriskanaly...
From Article Linked Above: "First, the FOMC is going to make permanent the RRPs, essentially accepting the proposal by the Federal Reserve Bank of St Louis to create a standing repo facility for banks and nonbanks alike. This means that funds, REITs and especially smaller dealers are going to be able to go direct to the Fed of New York and finance collateral"
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Jason Burack is an investor, entrepreneur, financial historian, Austrian School economist, and contrarian. Jason co-founded the startup financial education company Wall St for Main St, LLC, to try to help the people of Main Street by teaching them the knowledge, skills, research methods, and investing expertise of Wall Street. You can also find Jason's work at his blog website at www.jasonburack.com.