Escalating High Yield CDX Index Spread Shows Things are Getting Really Ugly
Escalating High Yield CDX Index Spread Shows Things are Getting Really Ugly. In good times the spread between the High Yield CDX Index and Treasuries narrows. That’s because lots of investors are very confident in the state of the economy to buy high yield bonds despite their below-grade ratings. However, as the chart below shows, in times of financial crisis the spread spikes sharply as investors run for the hills, fearing the worst. The fact that the spread is a now lofty 592.91 6% is an indication of how bad things are becoming. You’ll note the present spread is even higher than the periods around the financial crisis around 2012- 2013 and 2015-2016.