The Hissing Fuse

A falling HYG/LQD ratio means high-yield bonds underperform investment-grade — a sign of rising credit stress and risk-off positioning.

Historical avg ≈ 17. Dot-com peak: 44.2. 2009 trough: 13.3. Measures inflation-adjusted 10-yr avg earnings.

Positive = normal. Negative = inverted — has preceded every US recession since 1955, typically by 12–18 months.

Real rate = Fed Funds − CPI. Positive = restrictive (slows economy). Negative = accommodative (risks re-igniting inflation). Fed target: 2% inflation.

<190k Healthy  ·  190–220k Normal  ·  220–270k Rising  ·  >270k Elevated. Raw DOL state data (not seasonally adjusted).

<$60 Very Low  ·  $60–80 Low  ·  $80–95 Moderate  ·  >$95 Elevated. Oil spikes precede ~70% of recessions. Also a key proxy for Middle East geopolitical tension.

Gold surges signal flight to safety — investors fleeing equities, credit, or geopolitical risk. Near all-time highs often coincides with peak macro uncertainty.

Copper prices reflect industrial demand; gold reflects fear. A falling ratio means gold is outpacing copper — markets pricing in slowdown or stress. Popularised by Jeff Gundlach as a leading indicator for growth and Treasury yields.