maandag 22 december 2014

Crude Oil Vs. Junk Bonds

Energy junk bonds comprise 15% of the total junk bond market. So that is a big chunk and naturally we would find some correlation between these two.

As you can see, the trend is there, but not too pronounced. But lately, after 2008, the energy junk bond market (lead by the oil price) is leading the total junk bond market lower. So plunging oil prices have negative consequences on junk bonds. And lower junk bond prices will eventually lead to a stock market crash.

Conclusion: declining oil prices and higher stock markets are impossible.

For more info, go here.

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