This commentary highlights the implications of unusually tight high-yield spreads for forward returns.
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High-yield spreads sit near historical lows at roughly 3%, offering steady carry but leaving little room for further compression and increasing the probability of widening.
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Historical periods with sub-3% spreads delivered modest one-month gains for HY, while equities showed a wider dispersion of outcomes and notably stronger upside potential.
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With 2026 expected to bring above-trend growth, equities may offer more attractive risk-reward than credit, though HY remains valuable for income and diversification.
Review the full commentary to assess how tight-spread environments should influence portfolio positioning.
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