Wednesday, February 1, 2012

Where's the Crowding Out?

If the issuance of treasury securities were creating a problem for private companies, the above charts (the top for junk bonds, the bottom of high grade corporate bonds) would be the exact opposite -- they'd both be heading south.  However, we're seeing a rally in both sectors, telling as there is ample private demand for these securities.  That probably has something to do with record low interest rates in the treasury market, which means investors will be looking for higher yielding assets.