Corporate Bond Yields Update

We recently looked at the role of corporate bond yields as a price floor. Here's an updated bond yield chart:

Notice that bond yields have started to creep back up, and so has the earnings yield. The good news is that this indicates prices have begun to stabilize back on the bond floor. The bad news is that floor may be falling.

Note: The S&P earnings yield used here is calculated by dividing the current S&P 500 index ($825.88) by 4 times the current Dec. 2008 EPS estimate ($8.73) to yield 4.2%. This is to be consistent with the previous data used in the chart. However, if you use the forecasted 12 month EPS, the earnings yield is actually higher (4.8%) and pretty close to the current AAA bond yield.