Lowest Margin EVER IN HISTORY between TBILLS and Investment Grade Long Bonds - cash as a weapon.

I enjoy reading Christopher White at Loop Capital every day. He has a perspective on fixed income markets often not available to equity focused traders.

“According to Goldman , IG bonds offer the smallest extra yield margin ever compared to 3-month bills. The biggest IG ETF . LQD, 30-day SEC yield , according to Blackrock is 5.02% .  Why would one want to take credit and duration risk by buying IG Corps when 6-month Bills offer the same yield? “

MY TAKE:
You have to really believe that inflation is back to a normal 2-3% and the economy is going to get really bad for this to make sense.   And if it does make sense this would be a disaster for equities which are currently near historic high valuations.  High valuations like this usually happen in the middle of a bad economic cycle when earnings are about to take off.

Rising interest rates, worries about a recession while equites are at high valuations and rising reminds me of the set up before the 1987 crash.   That crash recovered fairly quickly and was a great time to buy.    But to buy in a moment like that you need cash.    And today cash is yielding 5.0% in the right places.   It pays to wait and miss out on exciting rallies.  Now more than ever cash is set up to be an offensive weapon in the portfolio.