Recession fears melt away as bond yield spreads fall to new 2023 lows, suggesting more upside for the stock market

• Recession fears are dissipating as bond yield spreads fall to new 2023 lows, according to Bank of America.
• The decline in spreads reflects rising investor confidence in corporate earnings.
• If earnings are solid, “this would confirm the ongoing rally in US equities and sets us up for further upside,” DataTrek said.

The recession fears that were so prominent at the start of the year are beginning to dissipate as bond yield spreads fall to new 2023 lows, according to Bank of America.

The bank said in its July credit investor survey that while a possible recession remained the top concern among respondents, the share of that worry fell to the lowest level since May 2022. Other top fears among bond investors include inflation, rising interest rates, and geopolitical risks.