In case you have had your head down focusing on other things, and not taken a moment to look at what spreads have been doing, the following chart will provide you with a snapshot as of February 23, 2016. Key takeaways include:
- Looking at commodities, Oil, as measured by WTI futures contracts, has bounced from a low of $28 to a current price of $31; the Energy sector is a whopping 119 bps wider year-to-date and the Materials sector is 49 bps wider.
- Telecommunications moved 41 bps wider due to the valuation of companies such as Verizon, AT&T and Qwest. Smaller rivals competing for sales have been a concern.
- Consumer Discretionary has widened as spending has slowed possibly due to the winter season and consumers holding back until the economy shows more of a positive direction.
Chart 1: Year-To-Date Change in Option Adjusted Spreads of the S&P 500 Bond Index
Source: S&P Dow Jones Indices LLC., Data as of Feb. 23, 206. Past performance is no guarantee of future results. Chart is provided for illustrative purposes.