"In a recent research note Moody’s credit analysts note the action in the high yield bond market being consistent with leading recession indications:
at http://pragcap.com/high-yield-bond-spreads-are-forecasting-a-recession
“the widening by the high yield bond spread from an April 2011 average of 442 bp to a recent 732 bp warns of a possible quick end to the current credit cycle upturn. Each previous widening by the high yield bond spread to a width in excess of 700 bp occurred in the context of a credit cycle downturn that included a harsh and extended slump by high yield debt issuance. The record also shows that recessions tend to occur whenever the high yield bond spread’s month-long average tops 700 bp. The only exception to this tendency was the second half of 2002, or when a recession failed to materialize notwithstanding the high yield bond spread’s 784 bp average of that span.”
at http://pragcap.com/high-yield-bond-spreads-are-forecasting-a-recession
