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How Bonds Lead Equities

By Norm Conley

 About this article:
 This column appeared in a slightly different form in Columnist Conversation on Jan. 13. Jim Cramer mentioned yesterday in Columnist Conversation that municipals were acting well, and that some segments of the bond market were "really on fire." There are definitely signs of improvement in a bunch of areas of the credit market. Since early to mid-December, for example, the yield ratio between BAA-rated corporates and 10-year Treasuries has declined meaningfully. The chart below details what has occurred. Ratio, BAA-Rated Corporate Bond Yields to 10-Year Treasury Yields Federal Reserve, JAG Advisors Anecdotally, our firm has seen a dramatic increase in hard-dollar interest in corporate fixed income over the past four weeks. I view this as a very preliminary sign of improving risk appetites in certain parts of the investment community. If the overall appetite for risk continues...

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