And I'm stunned to note the US (neck & neck with Japan) is one of
the lowest yielding markets in the world.
Not exact matches
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.
For one thing, those 10 - year Canada bonds are
yielding just 1.14 % and could lose value should interest rates rebound from their recent
lows, as many
market - watchers expect.
In a client note on Thursday titled «Yanking down the
yields,» the interest - rates strategist projected that bond
yields would be much
lower than the
markets expected because central banks including the Federal Reserve were reluctant to raise interest rates.
In the short - term, however, this increased leverage may actually be bullish for junk bonds, corporate bonds, emerging
market debt and mortgage - backed securities as it brings higher prices and
lower yields, he said.
With the Fed actively buying securities on the open
market, the additional demand means bond issuers can promise
lower yields and still attract investment.
Liew said that with the wide variations in credit quality across emerging
markets, from non-investment grade countries such as Argentina and Venezuela, to single - A rated ones, such as Malaysia, GIC was looking for «idiosyncratic situations,» in emerging
markets which were likely to converge with
lower -
yielding developed
markets.
GIC Chief Investment Officer for fixed income Liew Tzu Mi said on Thursday that the Singapore wealth fund was targeting fixed income investments with selective emerging
markets which were likely to converge with
lower -
yielding developed
markets.
That might
lower the amount of debt entering the high
yield market.
While these companies are unsurprisingly out of favour with many investors — a lot simply won't buy these companies on moral grounds — they think the sector's high
yields,
low correlation with
market cycles and steady earnings will make investors give them another look, and then stock prices will appreciate.
More from Financial Times: Deepening US political controversy stalks
markets Lower Treasury
yields knock Wall Street financials Microsoft held back free patch that could have slowed WannaCry
Cramer saw one narrative dominate Monday's tape: that 10 - year Treasury
yields approaching 3 percent would send the stock
market lower.
While overall
low inventory has led to competition in some
markets — about a quarter of 2017 home sales
yielded sales prices higher than the asking price, according to Zillow — it's a different story for some sellers.
Meanwhile government bond
yields, a reliable barometer of
market fear, are falling to record
low levels as investors engage in a panicked hunt for risk - free assets.
Investors were watching the report closely after fears of surging inflation helped send the stock
market lower and bond
yields higher.
Also, Ablin added a large portion of the recent rally involved a rotation from bonds into stocks as
low interest rates forced investors to seek
yield in the stock
market.
But he warned that could be changing: «There's a very
low hurdle for that surprise because bond
market yields are so
low in the front end of the curve.
On average, private business loans from relatives and friends have interest rates 2 to 3 percent
lower than
market rates and 1 to 2 percent higher than high -
yield savings rates.
Although it is fair to say that the recent uptick in volatility has in part reduced earlier concerns about prolonged
low volatility and associated reach - for -
yield behavior, it has placed added focus on the resilience of liquidity, particularly in
markets, such as the
market for corporate bonds, that may be prone to gapping between liquidity demand and supply in stressed conditions.
More from The New York Times: For Bond Investors,
Low Expectations in a
Low -
Yield World Emerging
Market Bonds Are on a Roll.
Yields in the $ 14 trillion
market for U.S. government debt touched record
lows in 2016, driven by years of aggressive central bank intervention in the wake of the 2008 - 2009 financial crisis to keep interest rates
low to stimulate the economy.
Brian Belski, BMO Capital
Markets» chief investment strategist, says bonds are still the main place for investors to stash money, even with today's
low yields.
In fact, credit spreads in many
markets are trading at the
lowest levels as a percentage of their overall
yield in a decade (see chart below).
Recent moves in the bond
markets have unsettled investors used to
low yields.
the percentage of return an investor receives based on the amount invested or on the current
market value of holdings; it is expressed as an annual percentage rate;
yield stated is the
yield to worst — the
yield if the worst possible bond repayment takes place, reflecting the
lower of the
yield to maturity or the
yield to call based on the previous close
Weigh your options: High -
yield savings with rates that beat money
market accounts mean you'll come out ahead in the long run, and the best savings accounts have
low to no minimum deposits.
Its underlying index selects and weights its bonds by
market value, and this method
yields a portfolio that aligns well with our benchmark in terms of credit tranches and maturity buckets, with the only notable difference being a slightly
lower YTM.
The 35 year bull
market in bonds most likely ended on July 8, 2016 when the 10 year maturity U.S. Treasury Note
yield hit an all - time
low of 1.36 %.
Global bonds are vulnerable due to
low current
yields, depressed term premia1 and the desire of developed -
market central banks to unwind unconventional policies.
By doing this, central banks hope to condition
market expectations,
lowering interest rates further out the
yield curve (much like additional cuts to short - term interest rates would have done, had they been possible).
The Treasury
market often becomes a safe haven from falling stocks, and that pushes
yields lower.
The potential counter weights that could cap the 10 - year
yield would be a negative stock
market reaction that drives investors to bonds;
lower interest rates outside the U.S. that make the U.S. debt relatively more attractive, and good demand for longer - dated securities from insurers and others.
Emerging -
market companies have piled on debt in recent years, allured by
low interest rates from
yield - starved investors.
To the extent that
lower Treasury
yields are even weakly associated with higher equity valuations, recognize that this effect is also expressed over time as
lower subsequent stock
market returns.
With
market volatility hitting multi-decade
lows, junk bond
yields also at record
lows, the median price / revenue ratio of S&P 500 constituents at a record high well - beyond 2000 levels, and the most strenuously overvalued, overbought, overbullish syndromes we define, I'm increasingly concerned about the potential for an abrupt «air pocket» in the prices of risky assets that could attend even a modest upward shift in risk premiums.
Although the bond
market is also volatile,
lower - quality debt securities, including leveraged loans, generally offer higher
yields compared with investment - grade securities, but also involve greater risk of default or price changes.
In effect, we have a
market with extraordinarily
low yields in a
market environment where
yields are being pressured upward.
Valuations on high -
yielding stocks may have become overstretched in the historically
low -
yield environment, potentially making them vulnerable if the
markets experience a mean reversion shift.
For example, while high
yield spreads are considerably
lower than they were at the January
market bottom, they are approximately 200 basis points (2 percent) wider than they were two years ago, as Bloomberg data shows.
The
markets»
low -
yield environment hit the bank with tighter credit spreads, which were reflected in a $ 567 million pretax debit valuation adjustment loss.
«We are hoping «mom and pop» can do a little bit better than the bond
market at a time of historically
low yields.»
Finally, the Fed's easy - money policies have pushed investors into the stock
market because bond
yields are so
low.
-LSB-...] than lament the
low yields, why not look for undervalued bonds during a
market correction?
This was a function of the
low level of
market yields, as well as the
low level of volatility and
yield movements.
The quality portfolio may have higher risk - adjusted returns than the broad
market, but it will also likely have
lower overall returns due to the
lower yield.
The world has changed, and that has unsettled bond
markets used to
low yields / rising prices throughout the post-recession expansion.
Oil prices have fallen more than 15 percent since March 4 to a six - year
low of $ 42.3, wiping out $ 7 billion of
market value of high -
yield debt issued by energy companies.
The Barron's article pointed this out as well, citing London - based «G+E conomics» head Lena Komileva: «A surplus of investment funds looking for returns in
low -
yield global
markets results in a cap on longer - term
yields and a flat
yield curve.»
They are searching for
yield but interest rates from fixed income products have generally been
low, and there is fear that equity
markets could be nearing a period of intensified volatility.
However, these higher
yielding bonds are often the most risky, resulting in a
lower risk - adjusted return than the broad
market.