Sentences with phrase «yield credit risk»

The fixed income factors can be further adjusted to account for the yield curve and to add high yield credit risk as an additional factor.

I've previously outlined that high yield credit risk is typically less ideal than simply gaining credit exposure through stocks and rate exposure through bonds.

Not exact matches

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.

Investors increasing their current yield by taking credit risk in junk bonds have recently learned a similar lesson.

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.

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.

CNBC's Jackie DeAngelis reports faltering crude prices could put high yield energy credit spreads at risk.

«What we're doing is reducing exposure to more cyclical industrial corporate credit risk around the globe — high yield bonds, bank loans, investment - grade corporate bonds,» said Collins.

Gold surges toward $ 1400 / oz, S&P 500 tumbles to 2000, 10 - year Treasury yield to 1.5 %; if credit spreads don't crack (e.g. IBOXHYSE < 500bps) and Mexico peso finds quick low = entry point for risk - takers (especially if Trump protectionist fears allayed); until then best Trump trades = long gold, short EU banks, long US small - cap, short EM.

We prefer to take economic risk through equities rather than credit against a backdrop of low absolute yields, tights spreads and rising rates.

debt obligations of the U.S. government that are issued at various intervals and with various maturities; revenue from these bonds is used to raise capital and / or refund outstanding debt; since Treasury securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower yields than other securities; the interest paid by Treasuries is exempt from state and local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury bonds, zero - coupon bonds, Treasury Inflation Protected Securities (TIPS), and Treasury Auctions

The economists did offer some caveats to their view, adding that risk - reward tradeoffs don't necessarily look attractive, valuations remain high — particularly in U.S. high - yield credit — and there's a growing risk of an overheated labor market and recession down the road.

Investors should monitor current events, as well as the ratio of national debt to gross domestic product, Treasury yields, credit ratings, and the weaknesses of the dollar for signs that default risk may be rising.

Easy monetary conditions should keep yields compressed in the near term and support risk assets, including European credit and equities.

Lower yields Treasury securities typically pay less interest than other securities in exchange for lower default or credit risk.

Additionally, with many investors focused on credit risks, particularly in high yield, convertibles may be more favorable relative to spread products.

Because they are considered to have low credit or default risk, they generally offer lower yields relative to other bonds.

Collins has adopted a more defensive position in the last 18 months, reducing duration and credit risk by scaling back overweight positions in high - yield and municipal bonds, but he's sticking with allocations to intermediate term funds.

While bond credit ratings and relative yield can compensate an investor for the relative risk of companies to make good on their debts, the recent past has shown this is not always the case.

• Lower - quality debt securities generally offer higher yields but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer.

Looking back over the past fifteen years, in months when high yield credit spreads were widening, indicating tighter financial conditions and more risk aversion, the S&P 500 outperformed the Russell 2000 by an average of roughly 0.45 percent.

BKLN offers a liquid way to earn higher yield with less interest rate risk but significantly higher credit risk.

But high yield actually has equity - like characteristics, so if you're immunizing the duration and loading up on credit, you are doubling down on your risk profile.

In an unconstrained bond fund, the manager can hedge interest rate risk with futures, options, or swaps, or even short Treasury bonds or notes, and make up the loss in yield by overweighting credit.

You may search for and purchase high yield bonds at Fidelity.com, where you can choose the credit rating levels appropriate for your portfolio and risk tolerance.

Lower credit ratings High Yield Bonds have lower ratings due to the potentially greater risk involved.

Because credit and default risk are the dominant drivers of valuations of high yield bonds, changes in market interest rates are relatively less important.

Credit risk High yield bonds are subject to credit risk, which increases as the creditworthiness of the issuer Credit risk High yield bonds are subject to credit risk, which increases as the creditworthiness of the issuer credit risk, which increases as the creditworthiness of the issuer falls.

Credit Risk: Investors that are chasing yield in lower qualiity bonds are doing so by increasing their credit or defaultCredit Risk: Investors that are chasing yield in lower qualiity bonds are doing so by increasing their credit or default rRisk: Investors that are chasing yield in lower qualiity bonds are doing so by increasing their credit or defaultcredit or default riskrisk.

This results in lower yields, interest rate fluctuation, credit risk, issuer insolvency and selling before maturity.

One way to diversify traditional fixed income investments is to consider strategies that shift away from highly indebted companies and offer a balance between interest rate and credit risk... while still providing an attractive yield.

For example, investors might use the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) to gain access to greater credit risk through an ETF focused on bonds rated BB and B, and the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) to gain access to less credit risk through an ETF focused on bonds rated A and BBB.

Whereas the cash flow statement and balance sheet are still very important considerations in the High Yield Dividend Newsletter, we put put a greater focus on credit assessments and qualitative, subjective considerations given the riskier nature of such higher - yielding ideas, both with respect to income sustainability and subsequent valuation (share price risk).

When you invest in credit, you are typically compensated for taking more risk via a higher yield.

Floating - rate loans» low credit ratings indicate greater potential risk of default relative to investment - grade bonds (though default rates for floating - rate loans historically have been lower than on high - yield bonds).

In doing so, investors are taking on a range of risks such as exposure to changes in the shape of the yield curve, credit spreads or exchange rates.

By looking at the difference in yield between a corporate bond and a Treasury of the same maturity, you can get an idea of the extra premium investors require for the extra credit risk inherent in the corporate bond.

Lower yields - Treasury securities typically pay less interest than other securities in exchange for lower default or credit risk.

High - yield bonds, those from companies with weak financial positions and poor credit, are offering rates as high as 9 % for 30 - year terms but also offer the risk of bankruptcy before the bond matures.

As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for market losses, particularly given that the current bull market has now outlived the median and average bull, yet at higher valuations than most bulls have achieved, a flat yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.

Former Fed Governor Stein highlighted that Federal Reserve's monetary policy transmission mechanism works through the «recruitment channel,» in such way that investors are «enlisted» to achieve central bank objectives by taking higher credit risks, or to rebalance portfolio by buying longer - term bonds (thus taking on higher duration risk) to seek higher yield when faced with diminished returns from safe assets.

Treasury yields, credit ratings, and the weaknesses of the dollar for signs that default risk may be rising.

However, the yields of Treasuries are paltry while credit instruments like high yield bonds exhibit equity - like risk, albeit with potentially higher yields.

While reaching for yield has been successful in the past, we suggest increasing credit quality, increasing liquidity and reducing risk in an environment where the Fed's policy changes introduce a very different forward - looking outlook.

High yield bonds (bonds rated below investment grade) may have speculative characteristics and present significant risks beyond those of other securities, including greater credit risk, price volatility, and limited liquidity in the secondary market.

Although default risk is typically low, there are high - yield municipal bond funds that increase credit risk.

The global search for yield has driven many fixed income investors into unfamiliar territory, leading them to embrace more credit risk and even venture beyond the bond markets — not just into dividend - paying equities but also into selling equity options.

The Oakmark Equity and Income Fund invests in medium - and lower - quality debt securities that have higher yield potential but present greater investment and credit risk than higher - quality securities, which may result in greater share price volatility.

Currently, BBB - rated bonds are equal to 45 % of the entire outstanding high - yield market, which has increased from 30 % a decade ago.3 Since BBB is the lowest investment - grade bond rating, the risk is that many poor credits will fall, like angels, from the investment - grade into the high - yield universe.

Although many have moderate credit risk, there are high - yield options that increase default risk (see high - yield bond funds).