sorry to start another topic, but schweser notes dont explain this too well..
during an econ contraction- credit spreads tighten…due to flight to quality/safety…treasuries yields come down as their prices inflate, and junk bonds yield goes up as their prices decrease…correct?
so this means during an expansion spreads get wider as the opposite happens? somebody please clarify because that doesnt sound right…作者: ogoluwa 时间: 2013-4-22 12:56
It’s actually the opposite
Credit spreads increase during economic contractions as there is a higher possibility of default , and credit spreads decrease during economic expansions
