High yield bond spreads (based on Merrill Lynch indices) narrowed for the 13th straight trading day on Monday. This marks the longest streak of declines since April 2003, and the second longest streak since the series began in 1997. At a current level of 1,744 basis points above Treasuries, high yield spreads are now down 20% from their peak level from December 15th (2,182 basis points) and back to levels we saw before the election and the run on Citibank (C). Make no mistake that at current levels high yield spreads are still extremely high, but given the widespread view that the market cannot stage a meaningful rally until spreads begin to narrow, the current move is a step in the right direction.
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