What did Federal Reserve Chair Janet Yellen mean when she said the following?
"We’ve also seen the compression of spreads on high-yield debt, which certainly looks like a reach for yield type of behavior."
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Investopedia does a perfectly fine job of explaining it:
The percentage difference in current yields of various classes of high-yield bonds (often junk bonds) compared against investment-grade corporate bonds, Treasury bonds or another benchmark bond measure.
So ... if a lot of people are buying junk bonds (i.e. reach[ing] for yield), those bonds' prices go up (due to supply-and-demand) and their yields go down (by definition), meaning the difference (spread) between investment-grade bond yields (which have presumably not changed) and junk bond yields is reduced (compressed).
Therefore, the compression in the yield spread means that a lot of people are so hungry for high returns that they're ignoring the high risk of junk bonds and buying them anyway.