Are Junk Bonds Losing Steam? Bulls Nervous.

Risk-On Indicators Surge as Small-Cap Stocks and Junk Bonds Rally

As we approach the end of the year, investors have witnessed a surge in risk-on indicators, with both small-cap stocks and junk bonds experiencing a significant rally. This phenomenon is often seen as a positive sign for the stock market, as it indicates a greater appetite for risk among investors. Small-cap stocks, which are typically more volatile than their larger counterparts, tend to outperform during periods of economic growth and optimism. Junk bonds, on the other hand, offer higher yields but are also riskier due to their lower credit ratings. The recent rally in these assets has coincided with a strong year-end stock market performance, fueling hopes for continued market gains in the coming year.