JUNK-BOND Demand

By Staff Reporters

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Junk bonds carry a higher risk of default compared to other bonds. Bond yields – or the return you get on investing in a bond – dip when prices go up. If investors crave junk bonds, the yields drop. Likewise, yields rise when people are selling.

So a smaller difference (or spread) between yields for junk bonds and safer government bonds is a sign investors are taking on more risk. A wider spread shows more caution. The Fear & Greed Index uses junk bond demand as a signal for Greed.

CITE: https://www.r2library.com/Resource/Title/082610254

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