So You think U.S. Stocks Are Costly? Try High-Yield Bonds
Comparing U.S. stocks to high-yield bonds makes the shares “look less stretched,” according to Jeroen Blokland, a manager of multi-asset funds at Robeco. Blokland cited a comparison between the Cboe Volatility Index, or the VIX, and the average gap between U.S. corporate high-yield debt and Treasury securities in a blog post Thursday. While the VIX set a 14-month low last week, the yield spread for the Bloomberg Barclays U.S. Corporate High-Yield Index reached its narrowest since July 2007 in the previous week. “Equities are relatively attractive versus high yield” on this basis, Blokland wrote.