Comments on: Friday Chart Challenge: High Yield Edition https://archive.theotrade.com/friday-chart-challenge-high-yield-edition/ Where the Professionals Come to Trade Wed, 20 Jul 2016 17:00:35 +0000 hourly 1 https://wordpress.org/?v=7.0.2 By: Heisenberg https://archive.theotrade.com/friday-chart-challenge-high-yield-edition/#comment-123 Wed, 20 Jul 2016 17:00:35 +0000 https://archive.theotrade.com/?p=6741#comment-123 Yeah, so think of the last chart as default risk (it's CDX). So when the spread between HY energy default risk and HY ex-energy default risk collapses, it's the market basically saying energy is getting less risky relative to the broader market ex-energy. A little bit of tightening in that spread is understandable given crude's bounce off the January lows, but for it to be the tightest it's been since late 2014 is absurd.

]]> By: George Musser https://archive.theotrade.com/friday-chart-challenge-high-yield-edition/#comment-120 Mon, 18 Jul 2016 04:33:38 +0000 https://archive.theotrade.com/?p=6741#comment-120 It looks like chart 1 tells us high yield defaults are at a relatively high level (although they were a lot higher for 2 short periods in the past). The last chart shows that HY- HY (less energy) has come down substantially from recent highs in 2014 & 2016. This seems to "imply" that there is less risk in energy but the overall risk is still relatively elevated compared to anytime prior to mid 2015.

Any ideas why? note XOM and CVX are also at what seem to be relatively high prices given the current crude price. The crude price also seems high given the info we hear anecdotally which seem to indicate that every tanker in the world is now full, Cushing is at or near record levels and China is about done filling their strategic reserve.

Is this just another version of now where else to put money so "people" are buying down risk spreads on high yield? Kind of ties in with what Don is selling on under priced risk in the market.

]]>