NEW YORK (CNN/Money) - Even as the Treasury market has been badly beaten, U.S. corporate bonds have fared very well. If that can keep on happening, it would be a very good thing.

It's hard to describe just how bad the selloff in Treasurys has been. The drop has driven the yield on the 10-year note from a low of 3.11 percent to the current 4.16 percent in a little more than a month. There hasn't been such a steep rise in rates since the 1980s -- back when rates were a heck of a lot higher.

Justin Lahart, senior writer at CNN/Money, talks about improvements in high-yield bonds. Play video (Real or Windows Media)

Yields on investment grade corporate bonds (bonds of companies whose futures are sure enough to investors that they're pretty certain they'll get their money back) have risen, too, but not quite as much as Treasurys'. In fact, investment grade spreads -- the difference between Treasury yields and corporate yields -- have narrowed the their lowest levels since June of 2000, according to Standard & Poor's.

Then there's high yield corporate debt, better known as junk -- debt issued by companies whose futures investors are far less certain of. Junk bond spreads have tightened to where they were a year ago. More importantly, on an absolute level they haven't budged much at all as Treasurys backed up: The average yield on a 10-year junk bond has been hanging at about 9 percent over the past month, according to Kirlin Securities chief strategist Brian Reynolds.

That's a heck of a lot better than what was happening in October, when average junk bond yields swelled to 14 percent. Back then, it appeared that many companies would be shut out of the bond market -- bad news because there was a raft of debt coming due in 2003 that they would have to refinance. The drop in yields has meant that companies were able to get debt deals done, and the big bad event that everybody was scared of back in the fall didn't happen.

There's another big load of debt coming due in 2004, however, and Reynolds suspects that there will be a surge of issuance in the coming months as companies rush to take advantage of the easy climate in the bond market. If it goes without a hitch, the bond market AND the stock market could become very happy places. The next big clump of junk bonds doesn't mature until 2006.

Conversely if anything does go wrong with the corporate bond market over the next few months, there could be big trouble.