Big, stable companies are paying more to borrow money…
Today’s chart shows the yield of the Bank of America Merrill Lynch U.S. Corporate BBB Index. This index tracks the yield of investment-grade corporate debt issued by large U.S companies.
As you can see, the average yield on corporate bonds has gone up from about 3.4% to about 4.1%.
This tells us that investors are demanding higher interest rates to loan money to stable companies. This is a huge red flag for the Wonderland economy. The economics of Wonderland only work when borrowing money is ridiculously cheap.
If rates continue to move up from zero, the Wonderland economy is in big trouble.