Barron's Confidence Index

Barron's Confidence Index

A confidence indicator calculated by dividing the average yield on high-grade bonds by the average yield on intermediate-grade bonds. The discrepancy between the yields is indicative of investor confidence.
A rising ratio indicates investors are demanding a lower premium in yield for increased risk and so are showing confidence in the economy.

Notes:

The theory is that if investors are optimistic they are more likely to invest in the more speculative grade of bonds, driving yields downwards and the confidence index upwards. The opposite is true if investors are pessimistic.

See also: Consumer Confidence Index, The Conference Board, Indicator, Michigan Consumer Sentiment Index, Yield

---

Barron's confidence index

Index measuring the ratio of the average yield on 10 top-grade bonds to the average yield on 10 intermediate-grade bonds. The discrepancy between high-rated top-grade bonds and low-rated bond yields establishes a measure that is indicative of investor confidence.

---

Barron's Confidence Index

A confidence indicator calculated by dividing the yield on intermediate-grade bonds into the yield on high-grade bonds. A rising ratio indicates investors are demanding a lower premium in yield for increased risk, thus expressing confidence in the economy and the securities markets. A rising index is considered bullish for stocks; a falling index is considered bearish for stocks. Compare Standard amp; Poor's Confidence Indicator.