While we don’t know where the overall rate environment—or the value or bonds or yields—will go in the months to come, we do know that credit spreads, between corporate bonds and treasuries, seem to be too high.

And we also know that you can benefit from the future narrowing of corporate bonds and treasury yields without taking on additional risks, like rises in interest rates.

What is the Bond Spread Kit?

The Bond Spread Kit is, in a way, an expression of a positive outlook on the credit health of established US corporations. But instead of just buying more corporate bonds, this low-risk Kit takes a short position, as well.

The paired trade aims to isolate the risk premium between bonds and treasuries without taking on additional risk like interest rate risk or duration risk commonly associated with corporate bonds.

Bond Spread FAQs

What kind of assets are in the Bond Spread Kit?

  • Goes long bonds and shorts treasuries

What strategies does the Bond Spread Kit use?

  • The Kit goes long bonds and shorts treasuries to isolate and capture the narrowing of the spread.

Did this answer your question?