Sea changes in financial markets and understanding high yield spreads

I was reading this memo from Howard Marks, and since am quite curious about financial market history, was fun to read his thoughts on some of the changes in how investors have behaved over a period of time from 1969 (when he started working in finance). He speaks of three pivotal moments, and all of them slightly based on credit markets. :slight_smile:

And since Howard is not really a Macroeconomics fan - I was reading up about what is one indicator that can be simple to understand and intuitive, and found this blog,

And this ^ blog ties really well with a recent research post on high yield spread volatility,

And felt it was nice to tie these up and share some thoughts around why its nice to track high yield spread. Here is a thread summarizing all three blogs if you want a TL;DR,


Govts & RBI has done a commendable job over the years keeping the bond yields fairly stable in the last 15 years.

How do you see the correlation between corporate bond yields and equity? @pai

Corporate bond yields is determined by a variety of factors, including the creditworthiness of the issuing company, prevailing interest rates, and the length of the bond’s maturity.

Equity performance, on the other hand, represents the change in the value of a company’s stock price over time. A company’s equity performance is influenced by a variety of factors, including financial performance, industry trends, market conditions, and investor sentiment.

While there may be some correlation between corporate bond yields and equity performance for a company, the two are fundamentally different metrics that reflect different aspects of a company’s financial health. It’s possible for a company to have strong equity performance but high bond yields due to perceived risk, or vice versa.


couldn’t stop myself from thinking aloud: case in point- latest Chola NCD ?

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