The Sherman Ratio is meant to “calculate what percentage increase in rates will offset a bond fund’s yield,” according to DoubleLine. For fixed-income investors who think 10-year Treasury yields will continue to move up this year as more Americans receive Covid-19 vaccinations, perhaps reaching JPMorgan Chase & Co.’s recently revised forecast of 1.45%, one of the few choices left that doesn’t lock in losses is junk bonds. The Sherman Ratio on the Bloomberg Barclays U.S. High Yield Index isn’t exactly appealing — it fell to a record low of 1.15 last week — but the securities are more insulated from interest-rate swings with a duration of just 3.64 years, less than the five- and 10-year average.
The Fed cannot suppress yields forever, & when interest rates rise, the whole ZIRP-MMT house of cards collapses upon itself. Higher interest rates cause lower discounted earning in stocks, so that bubble pops. It also means the government has to print money to pay interest on the debt, creating a Debt Spiral. It's very very ugly.