The Freight/Rate SpreadBond traders always are surprised at how often their market gets it right. While the stock market is supposed to be more forward-looking, I will beg to differ. As too many of us have found out the hard way, stock investors will chase a dream past the point of silliness, but bond traders have to be more circumspect. After all, their goals more often are current income and capital preservation as opposed to growth, and oftentimes their upside is limited simply to getting their money back. With one notable exception, the present, note yields have done a remarkable job of leading changes in the Baltic freight index over the past decade.
|The Great Note-Boat Divergence of 2002 |