The riskiest corner of the bond market is pointing to continued strength of the US economy
High-yield bonds, issued by companies with below-investment-grade credit ratings, are flashing signs that investors don't see much trouble ahead for these companies.
DataTrek Research this week flagged that high-yield bond spreads—essentially the yield paid to investors over a benchmark like Treasurys—are low. When spreads are wider, it suggests investors see more risk ahead and are demanding higher compensation to hold the bonds.
Yet, even with the possibility of President Donald Trump's sweeping tariffs raising inflation and negatively affecting the economy, high-yield bond investors are calm.
"US High Yield corporate bond spreads are now lower than at any point in 2021. This risk-wary market is just as bullish on the American economy as stocks," DataTrek co-founder Nicholas Colas said.
Colas noted that in 2021, markets were bullish on the prospects for the economy as the US began climbing out of the pandemic and households and companies were flush with stimulus cash.
He compared the current strong performance of high-yield corporate debt to large-cap stocks, which are also riding a wave of bullish enthusiasm among investors.
"Given that bond investors are a more cautious lot than their equity market counterparts, that is a bullish signal for stocks," he said.
Elsewhere in the bond market, Treasury yields have edged up this week as Trump fired off a fresh salvo of tariff updates, most recently threatening Canada with 35% tariffs starting on August 1. Yet, some investors aren't worried.
Steve Eisman, known for his role in "The Big Short," said this week that Treasury yields have been basically tranquil since 2022, indicating investors aren't worried about things like the deficit or mounting US debts.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
4 minutes ago
- Yahoo
Trump eyes 'world tariff' of 15-20% for most countries
By Andrea Shalal TURNBERRY, Scotland (Reuters) -President Donald Trump said on Monday most trading partners that do not negotiate separate trade deals would soon face tariffs of 15% to 20% on their exports to the United States, well above the broad 10% tariff he imposed in April. Trump told reporters his administration will notify some 200 countries soon of their new "world tariff" rate. "I would say it'll be somewhere in the 15 to 20% range," Trump told reporters, sitting alongside British Prime Minister Keir Starmer at his luxury golf resort in Turnberry, Scotland. "Probably one of those two numbers." Trump, who has vowed to end decades of U.S. trade deficits by imposing tariffs on nearly all trading partners, has already announced higher rates of up to 50% on some countries, including Brazil, starting on Friday. The announcements have spurred feverish negotiations by a host of countries seeking lower tariff rates, including India, Pakistan, Canada, and Thailand, among others. The U.S. president on Sunday clinched a huge trade deal with the European Union that includes a 15% tariff on most EU goods, $600 billion of investments in the U.S. by European firms, and $750 billion in energy purchases over the next three years. That followed a $550-billion deal with Japan last week and smaller agreements with Britain, Indonesia, and Vietnam. Other talks are ongoing, including with India, but prospects have dimmed for many more agreements before Friday, Trump's deadline for deals before higher rates take effect. Trump has repeatedly said he favors straightforward tariff rates over complex negotiations. "We're going to be setting a tariff for essentially, the rest of the world," he said again on Monday. "And that's what they're going to pay if they want to do business in the United States. Because you can't sit down and make 200 deals." Canadian Prime Minister Mark Carney said on Monday trade talks with the U.S. were at an intense phase, conceding that his country was still hoping to walk away with a tariff rate below the 35% announced by Trump on some Canadian imports. Carney conceded this month that Canada - which sends 75% of its exports to the United States - would likely have to accept some tariffs. (Additional reporting by Andrew MacAskill in Turnberry, Andrea Shalal in Edinburgh and William James in LondonEditing by Rod Nickel) Sign in to access your portfolio


Business Wire
5 minutes ago
- Business Wire
Nedia Fiber and Birla Cable Ltd. Form Exclusive Strategic Alliance to Boost Optical Fiber Cable Supply across the Americas
ASHBURN, Va.--(BUSINESS WIRE)--Nedia Fiber, a U.S.-based optical fiber cable supplier, and Birla Cable Ltd., a publicly listed global leader in fiber optic cable manufacturing, have formed a strategic alliance to accelerate the delivery of high-performance fiber optic solutions across the Americas. This alliance aims to reduce lead times, and meet growing telecom and broadband infrastructure needs across the region. Grateful for the strong, exclusive, and strategic alliance driving growth across the Americas continent. A powerful collaboration between Birla Cable (BIRLACABLE) and Nedia Fiber, led by industry veterans Siby Pothen, R. Sridharan, and Luiz Fuschini. Share Nedia Fiber brings decades of expertise and understanding of the American market. With a focus on speed, responsiveness, and execution, the company is positioning itself as a leading supplier for ISPs, Telcos, and EPCs across the Americas. Birla Cable Ltd., part of the esteemed M.P. Birla Group, is one of India's most respected fiber optic manufacturers, offering a portfolio of fiber and cable products supported by cutting-edge production facilities and global certifications. 'We are excited to launch this important alliance with Birla Cable Ltd., a company known worldwide for its manufacturing strength and product excellence,' said Mr. Siby Pothen, President of Nedia Fiber. 'Together, we are building a responsive supply model that aligns with the infrastructure needs of our customers across the Americas.' 'This important alliance is a key step in our global growth strategy,' said Mr. R. Sridharan, CEO of Birla Cable Ltd. 'Working with Nedia Fiber gives us direct access to the American market, backed by a team that understands how to move quickly, serve locally, and scale effectively.' Mr. Luiz Fuschini, COO of Nedia Fiber, added: 'Our alliance with Birla Cable is about execution. We are enabling the market with inventory flowing into the U.S. and strategic locations in South America. With a committed supply chain, we are ready to support projects with speed, precision, and trust. This is a bold step forward for both companies and for the industry across the Americas.' About Nedia Fiber Nedia Fiber provides agile, customer-focused optical fiber cable supply solutions throughout the Americas. The company delivers fiber solutions with speed, technical support, and reliable execution. About Birla Cable Ltd. Birla Cable Ltd., part of the M.P. Birla Group, is a leading Indian manufacturer of optical fiber and cables. Publicly listed and globally recognized, operates with its state-of-the-art production facilities and a commitment to technological innovation and product excellence.
Yahoo
24 minutes ago
- Yahoo
US and China to talk in Stockholm as trade truce expiration nears
When top US and Chinese officials meet in Stockholm on Monday, it's likely that they will agree to leave tariffs at the current levels, if they don't secure a more favourable framework. Analysts say the two sides are working to secure a more lasting trade deal ahead of a meeting between their presidents later this year. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are holding talks on Monday for the third time this year. This round of discussions is taking place in the Swedish capital, nearly four months after President Donald Trump upset global trade with his sweeping tariff proposal, including an import tax that shot up to 145% on Chinese goods. 'We have the confines of a deal with China,' Trump said on Friday. Bessent told MSNBC on Wednesday that the two countries had reached a 'status quo' after talks in Geneva and London, with the US taxing imported goods from China at 30% and China responding with a 10% tariff, on top of tariffs prior to the start of Trump's second term in office. 'Now we can move on to discussing other matters in terms of bringing the economic relationship into balance,' Bessent said. He was referring to the US running a $295.5 billion (€253.1bn) trade deficit last year. Washington is seeking an agreement that would enable it to export more to China and shift the Chinese economy more toward domestic consumer spending. The Chinese embassy in Washington said Beijing hopes 'there will be more consensus and cooperation and less misperception' coming out of the talks. With an eye on a possible leaders' summit, Stockholm could provide some answers as to the timeline and viability of that particular goal ahead of a possible meeting between Trump and Chinese leader Xi Jinping. 'The meeting will be important in starting to set the stage for a fall meeting between Trump and Xi,' said Wendy Cutler, a former US trade negotiator and now vice president at the Asia Society Policy Institute. 'Beijing will likely insist on detailed preparations before they agree to a leaders' meeting.' In Stockholm, the two sides are likely to focus on commercial announcements to be made at a leaders' summit as well as agreements to address 'major irritants', such as China's industrial overcapacity and its lack of control over chemicals used to make fentanyl, also to be announced when Xi and Trump should meet, Cutler said. Sean Stein, president of the US-China Business Council, said Stockholm could be the first real opportunity for the two governments to address structural reform issues including market access in China for US companies. What businesses will be seeking coming out of Stockholm would largely be 'the atmosphere' — how the two sides characterise the discussions. They will also look for clues about a possible leaders' summit, as any real deal will hinge on the two presidents meeting each other, he said. Fentanyl-related tariffs are likely a focus for China In Stockholm, Beijing will likely demand the removal of the 20% fentanyl-related tariff that Trump imposed earlier this year, said Sun Yun, director of the China program at the Washington-based Stimson Center. This round of the US-China trade dispute began with fentanyl, when Trump in February imposed a 10% tariff on Chinese goods, citing that China failed to curb the outflow of the chemicals used to make the drug. The following month, Trump added another 10% tax for the same reason. Beijing retaliated with extra duties on some US goods, including coal, liquefied natural gas, and farm products such as beef, chicken, pork and soy. In Geneva, both sides climbed down from three-digit tariffs rolled out following Trump's 'Liberation Day' tariffs in April, but the US kept the 20% 'fentanyl' tariffs, in addition to the 10% baseline rate — to which China responded by keeping the same 10% rate on US products. These across-the-board duties were unchanged when the two sides met in London a month later to negotiate over non-tariff measures such as export controls on critical products. Related Beijing confirms that it has signed a trade agreement with the US Volvo Cars CEO: dual tech for China and the West is new trade reality The Chinese government has long protested that American politicians blame China for the fentanyl crisis in the US but argued the root problem lies with the US itself. Washington says Beijing is not doing enough to regulate precursor chemicals that flow out of China into the hands of drug dealers. In July, China placed two fentanyl ingredients under enhanced control, a move seen as in response to US pressure and signalling goodwill. Gabriel Wildau, managing director at the consultancy Teneo, said he doesn't expect any tariff to go away in Stockholm but that tariff relief could be part of a final trade deal. 'It's possible that Trump would cancel the 20% tariff that he has explicitly linked with fentanyl, but I would expect the final tariff level on China to be at least as high as the 15-20% rate contained in the recent deals with Japan, Indonesia, Vietnam,' Wildau said. US wants China to dump less, buy less oil from Russia and Iran China's industrial overcapacity is as much a headache for the United States as it is for the European Union. Even Beijing has acknowledged the problem but suggested it might be difficult to address. America's trade imbalance with China has decreased from a peak of $418bn (€358bn) in 2018, according to the Census Bureau. But China has found new markets for its goods; the world's dominant manufacturer ran a global trade surplus approaching $1 trillion last year — somewhat larger than the size of the US overall trade deficit in 2024. And China's emergence as a manufacturer of electric vehicles and other emerging technologies has suddenly made it more of a financial and geopolitical threat for those same industries based in the US, Europe, Japan and South Korea. 'Some enterprises, especially manufacturing enterprises, feel more deeply that China's manufacturing capabilities are too strong, and Chinese people are too hardworking. Factories run 24 hours a day,' Chinese Premier Li Qiang said on Thursday when hosting European Commission President Ursula von der Leyen in Beijing. 'Some people think this will cause some new problems in the balance of supply and demand in world production.' Li added: 'We see this problem too.' Bessent also said the Stockholm talks could address Chinese purchases of Russian and Iranian oil. However, Wildau of Teneo said China could demand some US security concessions in exchange, such as a reduced US military presence in East Asia and scaled-back diplomatic support for Taiwan and the Philippines. This would likely face political pushback in Washington. The Stockholm talks will be 'geared towards building a trade agreement based around Chinese purchase commitments and pledges of investment in the US in exchange for partial relief from U.S. tariffs and export controls,' Wildau said. He doubts there will be a grand deal. Instead, he predicts 'a more limited agreement based around fentanyl'. 'That,' he said, 'is probably the preferred outcome for China hawks in the Trump administration, who worry that an overeager Trump might offer too much to Xi.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data