High-yields bond buyers skepitcal of jobs outlook

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The spread between yields on corporate bonds and Treasury debt widens or shrinks based on investors’ willingness to take on the riskier securities, which has a lot to do with their economic outlook.

You’d think that would have mean last week’s positive employment report would make that gap shrink because investors would be more confident.

But the spread tells a different story, said economists at Moody’s Capital Markets Research Group.

“Investors have responded with caution to favorable news on U.S. economic activity,” John Lonski, chief economist at Moody’s , wrote in a report Friday.

The gap between high-yield bonds and Treasurys did plunge the day the data came out, to 531 basis points from 554 basis points the day before, he said. (A basis point is one-on-hundredth of a percentage point.)

However, since then the spread has widened back out to 550 basis points.