As the crisis abates, bond managers get tempted by
the high yields of bonds that are lower in quality, lower in simplicity, and longer in duration.
Not exact matches
The Canadian dollar fell 0.6
of a cent to 97.34 cents US as the U.S. dollar and
bond yields headed
higher after the announcement.
LONDON, April 23 - Hamstrung by a renewed slump in volatility and lack
of clear market direction, FX and
bond speculators are making historically big bets on a lower dollar and
higher yields.
If interest rates rise and push that risk - free rate
of return
higher, then those dividend stocks and
high -
yield bonds are vulnerable.
If you take the view that few if any
of Trump's proposals will play out as hoped, Fehr recommends a defensive positioning, with a heavy weighting to
bonds and large - capitalization,
high -
yielding stocks such as telecoms, utilities and consumer staples.
Bond fund managers Jeffrey Aronson, Michael Vranos, and Boaz Weinstein discuss why they think
high -
yield market is showing signs
of a bubble.
When we talk about
bond market liquidity it's important to understand that there are lots
of different «pools» out there such as
high yield bonds, munis, government
bonds, etc..
The
bonds of iHeartMedia have long been in the basket
of «distressed debt,» meaning their prices have fallen so far to where their
yields are at least 10 percentage points
higher than equivalent Treasury
yields.
And they're going to pass them onto you and me as consumers, and that will push some
of the inflation data
higher, with some
bond -
yield reaction to it.
(
Bond yields move inversely with bond prices, and rising yields tend to signal expectations of higher growth and inflation ahead and, therefore, higher interest rat
Bond yields move inversely with
bond prices, and rising yields tend to signal expectations of higher growth and inflation ahead and, therefore, higher interest rat
bond prices, and rising
yields tend to signal expectations
of higher growth and inflation ahead and, therefore,
higher interest rates.)
The benchmark 10 - year
yield hit a
high of 2.626 % on March 13, briefly ticking above the 2.60 % threshold that the
bond - market veteran Bill Gross had said was «much more important than Dow 20,000.»
Also, as
bond rates rise, some
of the money that migrated over from the
bond market in search
of higher yields will return to the safety
of fixed income.
While investors will have to find stocks with
higher yields, pay more for them and take on more risk in
bonds, the biggest change in a permanently low - rate world is that people will need to set aside more
of every paycheque if they want to keep the same goal for retirement income.
Exchange - traded funds that track
high -
yield bond indexes have been the beneficiaries
of a cash surge in recent weeks.
Low sovereign
bond yields have long helped the government finance its debt, thus,
higher yields would undermine the sustainability
of its fiscal position, analysts said.
He started in
high -
yield bonds and went on during the internet boom to turn a million dollars in patent acquisitions into a portfolio
of software intellectual property worth $ 150 million.
Gundlach predicts that both
high -
yield bonds and a portfolio
of mortgage - backed securities could return about 6 percent in 2013.
The sell off in the market for
high yield debt, or junk
bonds, is now hitting a type
of structured
bond that is similar to the the type that blew up in the financial crisis.
Serge Pepin, the head
of BMO Investments, says people should consider corporate or
high -
yield bonds — also known as junk
bonds — which pay
higher yields than federal issues.
Their declining currencies against the dollar (8 - 9 percent over the past 12 months), falling stock market values since the beginning
of the year and
high (India) and rising (Brazil)
bond yields are reflecting their funding difficulties.
Bond yields rose to the
highs of the day as Federal Reserve Chair Jerome Powell laid out a case where the Fed could raise rates more than it has forecast.
I noted a week ago that Bernanke had essentially eased monetary policy by spurring a loosening
of financial conditions via
higher stock prices, lower
bond yields, tighter credit spreads, and a weakening
of the U.S. dollar.
Total issuance
of leveraged loans and
high yield bonds is down by nearly $ 140 billion this year compared to 2014, to about $ 575 billion.
And the
high yield bond market is already showing signs
of improvement.
The U.S. Federal Reserve's gauge
of inflation remains stubbornly below its 2 percent target, but U.S. 10 - year Treasury
yields spiked to near four - year
highs in January as a
bond sell - off gathered steam.
While credit risk might seem like a bad idea with the U.S. economy still weak and the rest
of the world looking equally uncertain,
high -
yield bonds do offer bigger returns than government and investment - grade
bonds.
The Vanguard
High Yield Corporate
Bond fund has underperformed Treasuries in the recent downturn, but it still has a positive return
of 0.5 percent in the year - to - date through Oct. 27.
The
yield on the BofA Merrill Lynch High Yield Bond index rose from just over 6 percent at the end of May to 7.9 percent as of Nov
yield on the BofA Merrill Lynch
High Yield Bond index rose from just over 6 percent at the end of May to 7.9 percent as of Nov
Yield Bond index rose from just over 6 percent at the end
of May to 7.9 percent as
of Nov. 17.
However, rates have retreated from over 8 percent in the last several weeks, and the credit risk
of high -
yield bonds can offer some diversification from the interest - rate risk
of a portfolio
of Treasury
bonds.
Two are focused on
high -
yield, or junk,
bonds, according to ETF.com, despite repeated warnings on Wall Street that the segment
of the market is headed for the rocks.
Exchange - traded funds that track
high -
yield bond indexes have been the beneficiaries
of a cash surge in recent weeks as market participants figure the central bank probably won't raise rates in 2015, and it could be well into 2016 before anything happens.
«Hence, the fear
of deflation driven by an acute oil price collapse receded, allowing
bond yields to move
higher,» he added.
10 - year
yields on Austrian government
bonds — and indicator
of stress on the country — are moving sharply
higher this morning.
Investors were watching the report closely after fears
of surging inflation helped send the stock market lower and
bond yields higher.
The bid - to - cover was 2.70, while 11.57 percent
of the
bonds were bought at
high yield.
Historically speaking, when the economy has gotten stronger, the price
of Treasury
bonds go lower and the
yield goes
higher.
The SPDR Barclays
High Yield Bond fund gathered more than $ 1.1 billion, or about half its total for the year, while the iShares iBoxx $
High Yield Corporate
Bond took in $ 603 million, pulling it out
of negative territory for the full year.
In this regard, our surveillance has been closely monitoring for any signs
of liquidity strains associated with the recent increases in spreads for
high -
yield corporate
bonds, as well as for idiosyncratic events affecting particular funds in this segment, such as the events surrounding the abrupt closing
of Third Avenue Management's Focused Credit Fund last December.
However, in the spring
of 2013,
high -
yielding stocks, which were basically trading as
bond alternatives, got crushed.
Bond yields set another round
of multiyear
highs — which could indicate inflation could emerge as a headwind.
Lewis, fund's chief investment officer, spent nine years at Citigroup as a director
of the bank's global special situations group, a $ 5 billion prop - trading group that specialized in distressed debt,
high -
yield bonds, and value equity.
Four
of the top 10 funds in terms
of inflows from Oct. 7 - 13 came from the
bond sector, and two
of them were focused on
high -
yield, or junk.
LONDON, April 30 - Government
bond yields in the euro area nudged
higher on Monday as focus turned to preliminary inflation data from Germany and Italy, two
of the bloc's biggest economies.
One
of the best coincident and real - time indicators
of bursting bubbles and recessions is the
yield spread between US
high -
yield corporate
bonds and the 10 - year US Treasury.
While it's better to invest than keep money under a mattress, buying risk free securities, such as guaranteed income certificates or low -
yielding government
bonds, could actually be riskier than purchasing
higher returning products, says Ted Rechtshaffen, president and CEO
of Toronto's TriDelta Financial Partners.
They have also increased the cost
of new fixed - rate mortgages as
yields on the
bond market have moved
higher.
Bond yields have been on an upward march this year as
higher inflation expectations spurred predictions
of a more hawkish Federal Reserve.
RB: The extreme undervaluation
of high yield municipal
bonds.
This
high -
yield, or junk,
bond market has been getting a lot
of attention lately as credit spreads have blown out.
yields will hit the
highs on close end
of the day... equity markets setting up to be slammed tomorrow maybe but today they have run over weak shorts in the face
of rates... the federal reserve see's this and again will wonder if they are behind on hikes, strong data, major expansion in credit, lack
of wage growth rising
bond yields and ballooning debt... rates will go much
higher and equities will have revelations as to what that means for valuations