Some of the main attractions of the high -
yield bond market for investors are:
Not exact matches
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 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.
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.
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.
Powell's comment was pointed to by
bond market strategists as a reason
for a sudden pop in
bond yields.
(Repeats to additional subscribers) NEW YORK, April 24 (Reuters)- The U.S. benchmark 10 - year Treasury
yield topped 3 percent
for the first time in more than four years on Tuesday, a milestone that reflects the durability of the U.S. economic expansion and stokes the view the three - decade - old bull
market in
bonds is numbered.
«A bear
market in
bonds calls
for more than a global cyclical upswing, as not all forces that dragged
yields down over the past decades have suddenly vanished,» argued Peter van der Welle, a strategist at Robeco.
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.
During a webcast presenting his 2017 outlook, Gundlach, the founder of DoubleLine Capital, said certain «second - tier» managers were focusing on 2.6 % as an important level
for the 10 - year Treasury
yield — a threshold beyond which the bull
market in
bonds would end.
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.
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.
Early in the year,
bond guru Bill Gross warned clients that if the 10 - year Treasury
yield jumped past 2.6 percent, bad things
for the fixed income
market would follow.
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.
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.
I sent out to some people last Wednesday why I thought the CDS
market would outperform ETF's, and that is still my view, and has a lot to do with the
bonds that make up the high
yield index and their rate risk exposure
for some, and horrible convexity
for others.
History shows when the benchmark rate
for everything in the economy from corporate
bond yields to mortgage rates moves by this much, this fast, the stock
market struggles in the following months.
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.
Markets around the globe are keeping a close eye on the U.S.
bond market after the
yield on the 10 - year Treasury note topped 3 percent on Tuesday
for the first time in several years.
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
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Nickel set
for biggest weekly increase since April 2009 Dow Jones Industrial Average reaches record on Thursday Gold heading
for worst week in a month Largest increase in 30 - year Treasury
yields since 2009 Italian
bonds are poised
for worst three - week selloff since 2011 Emerging -
market stocks set
for biggest three - day slide since August 2015 Mexico's peso plunges 12 percent in three daysCommodities
When
bonds yield 1.75 %
for investment - grade
bonds, then it's difficult to turn that into a 5 % -10 % return going forward... If he wants to argue against that, and talk about Dow 5000 and bear and bull
markets, then he's welcome to, but he's pushing at windmills in my opinion, and he belongs back in his ivory tower.
The $ 1.2 trillion
market for U.S. junk
bonds yields about 6.6 percent, double what's offered by higher - rated company debt, according to Bank of America Merrill Lynch index data.
Looking forward, even if you assume
bond yields settle down, probably somewhere in last fall's range of 2.2 % to 2.6 %
for the 10 - year Treasury note, this moderate year - to - date rise is still likely to inflict significant damage on parts of the
market.
In the credit
markets, both investment - grade and high -
yield corporate
bonds had negative returns
for the first time in eight quarters, with down - in - quality subsectors in each unconventionally outperforming higher quality ones.
These steps include: efforts to simplify prospectus requirements
for retail vanilla
bonds and ease the personal liability of company directors; improving
market transparency through the RBA's publication of new measures of corporate
bond yields; the lengthening of the government
bond curve; and the listing of certain fixed - income securities on the Australian Securities Exchange.
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.
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To the extent any rise in
bond yields is modest and gradual, these same developments would be positive
for equity
markets.
Bloomberg reported Thursday that after Draghi's bold words about protecting the euro last week,
markets expect him to deliver some sort of drastic action to do so and to relieve pressure on
bond yields, which have climbed steadily higher
for Spain and Italy.
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.
Tax reform could impact the high
yield market and lead to a buying opportunity
for municipal
bonds.
For bonds and CDs, scan summary calculations for total market value, total par value, average price, average maturity - years, average estimated yield, annual interest income, and average coupon ra
For bonds and CDs, scan summary calculations
for total market value, total par value, average price, average maturity - years, average estimated yield, annual interest income, and average coupon ra
for total
market value, total par value, average price, average maturity - years, average estimated
yield, annual interest income, and average coupon rate.
Junk -
bond ETFs rallied on Wednesday, as
markets breathed relief that the «fiscal cliff» is no longer a concern and as a result,
bond yields are under 6 percent
for the first time ever, and junk ETF share prices hit levels not seen in years in some cases, according to an article on ETF Trends.
-LSB-...] than lament the low
yields, why not look
for undervalued
bonds during a
market correction?
Tonight on Nightly Business Report, stocks tumble as
bond yields rise and tech earnings could be the next test
for the
market.
«Solid dividend payers like AWK will continue to command a premium in the
market as investors are looking
for any type of stable
yield,» said investment instructor and small - cap stock expert Jason
Bond.
Bond yields have likely bottomed out, and we don't see scope
for big rises in already elevated stock
market valuations amid tepid earnings growth.
The
markets finally woke up to this on Wednesday, after sleepwalking
for the past year, as
bond yields and stock prices sank and the...
After a relentless search
for yield, investors have piled into dividend -
yielding, defensive stocks, or what we call «
bond market proxies,» making many such segments extremely expensive.
«Every time the
bond market moves dramatically and unexpectedly higher in
yield, the consensus forecast plays catch - up,» says Matthew Hornbach, Global Head of Interest Rate Strategy
for Morgan Stanley Research.
Emerging companies While many high
yield bonds are issued by former investment grade companies in decline, the high
yield market also provides financing opportunities
for emerging companies seeking working capital
for expansion or to fund acquisitions.
The average
market impact cost was 29 basis points (39 basis points) per $ 1 million traded
for investment - grade (high -
yield) corporate
bonds.
Typically, the
market for high
yield bonds is less liquid than the
market for investment grade or government
bonds.
In
bond markets,
yields on 10 year
bonds are now at their lowest levels
for two decades.
Bond fund manager who called dollar's slide says «it's not too late to move out of U.S.
bonds» Jack McIntyre of Brandywine Global says look to emerging
markets for attractive
yields on sovereign bondsJack McIntyre of Brandywine Global says emerging
markets are still the place to look
for attractive
yields on sovereign
bonds.
The dollar
bond market has turned cold
for Indian firms after a record 2017, with rising global interest rates, geopolitical concerns and
market volatility prompting would - be financiers to demand either a higher
yield or invest only in short - term paper maturing in two years.
The early weeks of 2018 were full of twists
for financial
markets, with a rapid rise in
bond yields leading to a short, sharp sell - off in equities.