Title: Haymaker Daily — Are the Canaries Getting Woozy? Show: Haymaker (Substack) — Haymaker Daily, paid Guest: David Hay (Haymaker; co-founder/ex-CIO Evergreen Gavekal) Date: 2026-JUL-21 URL: https://haymaker.substack.com/p/haymaker-daily-60c Length: written post (no timestamps) Note: Macro/credit note (credit spreads — BB vs CCC junk-bond yield gap; 30-year Treasury yield). No named securities -> key-points page, no stock table. Body reproduced for personal study.
Hello, Haymakers:
The difference between the yield premium paid by corporate and government bonds is known as a yield spread. The corporate/U.S. Treasury spread is generally considered to be the most important and, encouragingly, it is extremely tight. This is indicative that investors remain in a risk-tolerant mood.
However, a potential (if proverbial) canary in the coal mine is the yield spread, or gap, between BB-rated bonds, the highest-grade junk issues (if you'll forgive the oxymoron) and CCC-rated debt. The latter is the lowest rung outside of bonds that are already in default.
As you can see below, that spread is presently around 800 basis points (bps) or 8% higher for CCC-rated bonds than those rated BB. That's a surge of roughly 300 bps, or 3%, from the lows (tightest) last summer. You'll further notice that is the most elevated since 2022 when a dual bear market in stocks and bonds was at its worst. Additionally, it is threatening to break above three-year resistance.
[chart: BB vs CCC yield spread — Bloomberg]
Whether this turns out to be an early warning signal is open for debate, but there's another message coming from the bond market that deserves monitoring. While the yield on the 30-year U.S. Treasury bond is not as critical as is the 10-year T-note yield — which so many private sector borrowing costs, like mortgages, are based on — a breakout and spike to, say, 6% would be problematic.
[chart: 30-year U.S. Treasury yield — Bloomberg]
Similar to the yield spread between BB and CCC bonds, it appears to be on the verge of an upside range expansion above multi-year resistance. At this point, it is premature to say yields on either market are breaking out (which also means the prices of the underlying bonds are closing to breaking down; yields move opposite to prices.)
Going forward, we will keep you informed on how this important situation develops.
The Haymaker Team