High -
yield bond investors require a tolerance for risk, along with the patience to weather periodic market downturns or unexpected events that negatively impact individual issues.
Considering the low
yield bond investors are earning during sunnier days for equity - only investors, when the storm comes, that outcome would be particularly painful.
High -
yield bond investors might be looking for the same.
Not exact matches
Markets around the globe have been keeping a close eye on the U.S.
bond market as rising Treasury
yields put
investors on edge.
REITs have long been popular with income - seeking
investors in this era of miniscule government
bond yields.
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.
So far, though, no one is reporting any unusual outflows in the
bond market, but Hamilton - Keen cautions
investors against chasing high -
yield products.
In other words, because
investors can not generate a sufficient return from low -
yielding bonds, they turn to stocks as their only alternative.
«If they do target aggressively the 2 percent inflation target, and undertake a significant amount of QE, that may have an impact on underlying JGB (Japanese government
bond)
yields as
investors become concerned over Japan's debt,» he said.
Although there may not be a
bond bubble, with
investors starved for
yield, Gundlach predicts a potential bubble could form in credit risk as
investors increase their leverage on riskier debt securities like junk
bonds and emerging market debt.
But what really rattled bank
investors was likely flagging
bond yields.
The Fed's low interest rate policy has driven more and more money into
bond funds as
investors search for higher
yields.
Bond investors like mutual funds and pension funds hope to buy securities with comparatively higher
yields than other asset - backed debt that could also provide diversification benefits.
Bond yields move inversely to prices; as a bond's yield declines, its price rises, offering investors the opportunity for capital returns in addition to the coupon payme
Bond yields move inversely to prices; as a
bond's yield declines, its price rises, offering investors the opportunity for capital returns in addition to the coupon payme
bond's
yield declines, its price rises, offering
investors the opportunity for capital returns in addition to the coupon payments.
When
bond yields rise,
investors often start weighing whether stocks are the only game in town for return.
For, with long - term taxable
bonds yielding 5 percent and long - term tax - exempt
bonds 3 percent, a business operation that could utilize equity capital at 10 percent clearly was worth some premium to
investors over the equity capital employed.
At some point,
investors who are conflating high -
yielding consumer staples stocks with
bonds or who are taking interest rate risk in long - dated Treasurys will see drawdowns as well.
The rise in
bond yields, which
investors fear could hurt equities, has been partly fuelled by the spike in crude oil prices, which on Tuesday crossed $ 75, boosting energy shares.
NEW YORK, Jan 18 - U.S. fund
investors pulled $ 3.1 billion from high -
yield «junk»
bonds during the latest week, Lipper data showed on Thursday, offering new warning signs about risk appetite despite global markets» continuing triumph.
Investors increasing their current
yield by taking credit risk in junk
bonds have recently learned a similar lesson.
U.S. government
bond yields rose on Tuesday, as
investors digested more economic data and an auction.
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.
RATES STILL LOW: Even as concerns about rising
bond yields and interest rates spook some
investors, bulls are quick to mention that rates are rising off extremely low levels.
Some
investors might react by moving capital from the U.S. to safe, stable Canada, putting some downward pressure on Canadian
bond yields and pushing up the loonie, said Burleton.
U.S. long - term rates would spike, while
investors in Canada would rush to the domestic fixed - income market, setting off a
bond rally that would push Canadian
yields down «substantially,» said Burleton.
More from The New York Times: For
Bond Investors, Low Expectations in a Low -
Yield World Emerging Market
Bonds Are on a Roll.
There just aren't that many stable places left for
investors to put their money and a lot of it will come here, perhaps heading to the
bond markets, driving
yields down.
Still, corporate
bond spreads have come up to around their historical average, providing impetus for institutional
investors trying to claw out
yield any way they can, even if it means an extraordinarily long - term commitment.
Higher
yields generally hurt stock prices by making
bonds more appealing to
investors.
Investors were relieved to see
bond yields pull back from the four - year highs they reached Wednesday.
Most
investors shy away from
bonds because they
yield (or return) less than equities and tend to be more complex in nature.
Pimco, one of the world's largest
bond fund managers, and widely followed Guggenheim Partners are among the
investors who say benchmark 10 - year Treasuries
yielding 3 percent - now within reach - are too hard to resist.
On Monday,
investors rushed into Treasuries as the S&P 500 and Dow Jones Industrial Average nosedived more than 4 percent - reversing a move on Friday when a spike in
bond yields, which move inversely to prices, triggered an equity rout.
With stocks trading near all - time highs and
bond yields still relatively low, some
investors have turned to alternative asset classes.
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.
Certainly, it offers an attractive level for longer - term
investors such as pension and insurance funds to lock in a relatively decent
yield, and will tempt some portfolio managers to buy
bonds rather than equities.
Though currently bank equity
investors are cheering the steepening of
yield curves, meanwhile, the 2003 Japan episode should fix regulators» attention on the growing home - bias in government
bonds.
Tax risks While municipal
bonds can offer attractive effective
yields and can be a way to generate tax - free income, they may not be right for
investors in every tax bracket or for every type of account.
Treasury prices cut earlier losses on Monday, pushing
yields slightly lower, after stocks fell sharply, pushing
investors into haven assets like government
bonds.
The
yield on a Treasury bill represents the return an
investor will receive by holding the
bond to maturity, and should be monitored closely as an indicator of the government debt situation.
Rates for home loans eased up slightly as
investors bought more
bonds, sending
yields down a few basis points.
Treasury
yields have been rising not because of rising risks but because the asset bubble in
bonds is deflating, inflation is rising, and
investors are demanding more
yield.
Attract a wider array of capital to clean energy investments by developing innovative financing structures — from reducing investment risk though our Catalytic Finance Initiative to engaging individual
investors through our Socially Responsible Investing platform to building new markets for green
bonds,
yield - cos and other vehicles.
Treasury
yields pull back sharply Thursday after the reemergence of trade tensions between global powerhouses rattles
investors, pushing stocks down and
bond prices up
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
The two largest funds in the segment — the $ 15 billion iShares iBoxx $ High
Yield Corporate
Bond ETF (HYG) and the $ 9 billion SPDR Bloomberg Barclays High
Yield Bond ETF (JNK)-- have faced sizable asset outflows as
investors fret over high valuations and rising interest rates.
But as
investors bid up
bond prices, the
yields come down e.g. $ 10 dividend payment on a $ 100
bond = 10 % dividend
yield, but if the
bond gets bid up to $ 200, the dividend
yield is only 5 %.