S&P 500 Earnings: Watch Credit Spreads to Gauge Recession Risk

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United States 10-Year,Ishares Iboxx $ Investment Grade Corporate Bond E,Ishares Iboxx $ High Yield Corporate Bond ETF

Market Overview Analysis by Brian Gilmartin covering: S&P 500, United States 10-Year, iShares iBoxx $ Investment Grade Corporate Bond ETF, iShares iBoxx $ High Yield Corporate Bond ETF. Read Brian Gilmartin's latest article on Investing.com

The weakening economic data has led to speculation about a hard landing or more-importantly recession risk ahead, which could very well happen, but high-yield credit spreads have yet to widen meaningfully, and that’s usually a good indicator of how bad a recession might be looming.

If you, as an investor, are worried about deteriorating credit profiles, stay with investment-grade bonds and bond-funds, and ETF’s or even the iShares iBoxx $ Investment Grade Corporate Bond ETF in 2025, so keep that in mind as we get closer to the 5-year anniversary of Covid, i.e. March, 2025. It shouldn’t take much in fed funds rate reductions to see a lot of higher-yielding issuers take advantage of what will be higher refinancing yields, but lower than what they are looking at today.

Readers should remember that every time the mainstream media and the Wall Street prognosticators thought the US was headed into a recession, , the US economy reaccelerated from those points and left everyone holding their higher-duration bonds.

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