Although US equities have been on the decline, high yield spreads, which usually rise as equities fall, have been surprisingly resilient.  Since the S&P 500 peaked on April 2nd, the S&P 500 has declined by nearly 5%.  Over that same time, high yield spreads have only risen by one basis point, from 599 to 600 bps!  Eventually this divergence will resolve itself, but which way will it be?  Will equities rebound, or will the high yield market play catch up on the downside?

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