10-Year Treasuries And AAA Corporate Bond Rates Aligned [Chart] by Todd Sullivan, Value Plays
Was looking to see if recent corp issuance had driven long rates higher, but AAA Corp and 10-Year Treasuries look like they trade in lock-step with ~160bps spread. I see a daily shifts in 10yr and AAA Corp mirror each other.
My intuition tells me that it is corp issuance demand for capital which is pulling rates higher, i.e. higher rates needed to have investors willing to buy debt and issuers are likewise willing to pay because they believe they will get returns above their interest costs. This is the way I interpret all rate moves. I do not expect the Fed to move till T-Bill rates rise above FFunds rates.
Let me know if you have any thoughts on this.