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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.

Escalating High Yield CDX Index Spread Shows Things are Getting Really Ugly
Escalating High Yield CDX Index Spread Shows Things are Getting Really Ugly

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Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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