Last week, the average
yield on corporate bonds sat around its highest levels since January 2012.
The BAA spread refers to
the yield on corporate bonds above the rate on comparable maturity Treasury debt, and is a market - based estimate of the amount of fear in the bond market.
Last week, the average
yield on corporate bonds sat around its highest levels since January 2012.
Credit spreads — the difference between
the yield on a corporate bond and the yield on a treasury security of similar maturity — can be viewed as a reflection of the risk of default.
Not exact matches
The gap between the earnings
yield on the S&P and Baa
corporate bonds is over two standard deviations in favour of stocks.
April 26 - U.S. stock index futures pointed to a strong open for the tech - heavy Nasdaq
on Thursday as a slew of upbeat earnings from Facebook and Qualcomm helped set aside worries over rising U.S.
bond yields and
corporate costs.
April 25 - Dow Jones Industrial Average futures erased losses
on Wednesday after Boeing reported strong results and forecast, but concerns about rising U.S.
bond yields and
corporate costs continued to weigh
on U.S. stocks.
He's also reducing risk
on the fixed - income side, reducing exposure to high -
yield and adding Treasurys and some
corporate bonds.
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.
The assumed discount rate utilized is based
on a broad sample of Moody's high quality
corporate bond yields as of the measurement date.
This leaves us roughly in the same position that we started the year, slightly overweight to spread product, i.e., investment - grade and high -
yield corporate bonds and emerging markets (more recently, we also went back to a slight overweight
on commercial mortgage - backed securities).
We trade all fixed income assets, with a focus
on more illiquid situations, from high
yield, distressed and investment grade
bonds and convertible
bonds to public and private
corporate securities and leveraged loans.
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.
Each fund has a stated objective, generally focusing
on a particular sector, such as
corporate or Treasury
bonds, or broad category, such as investment grade or high
yield.
Other
bond funds focus
on a narrower mix of
bonds, such as a short - term Treasury fund or a
corporate high
yield fund.
Other
bond funds focus
on a narrower slice of the
bond market, such as a short - term Treasury fund or a
corporate high -
yield fund.
Last week, spreads
on the Morningstar
Corporate Bond Index, an investment - grade corporate bond gauge, and the BofA Merrill Lynch High Yield Master Index, sho
Corporate Bond Index, an investment - grade corporate bond gauge, and the BofA Merrill Lynch High Yield Master Index, shot hig
Bond Index, an investment - grade
corporate bond gauge, and the BofA Merrill Lynch High Yield Master Index, sho
corporate bond gauge, and the BofA Merrill Lynch High Yield Master Index, shot hig
bond gauge, and the BofA Merrill Lynch High
Yield Master Index, shot higher.
Y represents the current
yield on AAA
corporate bonds.
Spreads between
yields on US Treasury securities and
corporate bonds have widened noticeably.
The iShares iBoxx $ Investment Grade
Corporate Bond ETF (LQD), the iShares iBoxx $ High
Yield Corporate Bond ETF (HYG) and the iShares Core U.S. Aggregate
Bond ETF (AGG) all made an appearance
on the outflows list.
Floating - rate * The coupon
on a floating - rate
corporate bond changes in relationship to a predetermined benchmark, such as the spread above the
yield on a six - month Treasury or the price of a commodity.
Central bank purchases, investor
yield - seeking and safe - haven flows have driven down
yields on government and investment grade
corporate bonds.
Moreover, the
yield on industrial
bonds in the Dow Jones
Bond Average continues to rise, further widening the risk premium
on corporate debt.
The average investment - grade (high -
yield)
bond trades
on less than 32 % (36 %) of days over the prior six months — liquidity in
corporate bonds was considerably lower than in traditional listed equity markets.
Yields on high - yield corporate bonds narrowed (centre panel) and record low government bond yields pushed up valuations of risky assets (right - hand p
Yields on high -
yield corporate bonds narrowed (centre panel) and record low government
bond yields pushed up valuations of risky assets (right - hand p
yields pushed up valuations of risky assets (right - hand panel).
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.
While
yields on government
bonds remain unattractive, according to Stopford, investment - grade
corporate bonds offer a modest pickup in
yield — and high -
yield bonds, a more significant advantage.
The
yield on the 10 - year Treasury
bond climbed above 3 % for the first time since 2014, but of greater concern to many market participants were remarks in major
corporate earnings reports suggesting that business conditions had likely hit their peak and were poised to deteriorate going forward.
On average, high - quality
corporate bonds currently have
yields that are at least one percentage point higher than Treasury
bonds.
And
on the list of possible investments are also high
yield corporate bonds and, perhaps, some emerging market sovereign
bonds.
Van Eck adds another
yield - generating ETF, this one focused
on emerging market
corporate junk
bonds.
In recent months, the
yield on US
corporate bonds, especially investment - grade securities, is a little more than 100 basis points compared to the
yield on government debt, dropping within striking distance of the lows seen post the 2008 financial crisis.
Any significant rise in
corporate bond yields would throw cold water
on a key artificial impetus in the stock market — corporations borrowing heavily to buy back their own stock.
With the exception of the very front end of the
yield curve, Canadian government
bond yields declined, as did spreads
on investment grade
corporate bonds.
Floating - rate loans have
yields and volatility similar to high -
yield corporate bonds, with one major difference: As their name indicates, their interest rates «float,» adjusting periodically based
on a benchmark rate, typically the London Interbank Offered Rate (LIBOR).
While spreads between
yields on highly - rated
corporate bonds and government
bonds have remained above their historical averages, this continues to reflect strong demand for Commonwealth Government
bonds rather than concerns about
corporate credit quality.
The continuing low level of government
bond yields has supported the search for
yield that has been evident over the past couple of years, with the spread between
yields on US government debt and
yields on both
corporate and emerging market debt remaining around historical lows over the past three months (Box B).
Spreads between
corporate bond yields and swap rates and the premia
on credit default swaps have fallen slightly over the period, and are very low by historical standards (Graph 44).
For example, one source found that,
on average, high -
yield corporate bonds trade fewer than half the days each month; meanwhile, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) trades millions of shares each
yield corporate bonds trade fewer than half the days each month; meanwhile, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) trades millions of shares
corporate bonds trade fewer than half the days each month; meanwhile, the iShares iBoxx $ High
Yield Corporate Bond ETF (HYG) trades millions of shares each
Yield Corporate Bond ETF (HYG) trades millions of shares
Corporate Bond ETF (HYG) trades millions of shares each day.
Yet we believe another milestone is of far greater significance to investors:
Yields on short - term U.S. investment grade (IG)
corporate bonds also hit 3 % — an eight - year high.
As seen in prior cycles, changes in short - term interest rates alone had
yielded little effect
on financial conditions, as buoyant risk sentiment strengthened equities,
corporate bonds, as well as various forms of «esoteric» investments.
Depending
on your risk tolerance and familiarity with individual corporations, now could be an opportune time to consider high
yielding corporate bonds as part of your investment portfolio.
After reaching a year - to - date low Option Adjusted Spread (OAS) of 378 bps
on May 8, the spread for the S&P U.S. Issued High
Yield Corporate Bond Index reversed direction.
The credit spread is the
yield the
corporate bonds less the
yield on comparable maturity Treasury debt.
Yields on both have increased this year, with the
corporate bond yield breaking above 3 % and Treasury
yield rising to just shy of 2.5 %.
Abstracting from changes in the composition of
corporate bond indices, spreads between
yields on government and
corporate bonds have shown a small net decline over the past three months (Graph 48).
The average
yield on the iShares iBoxx InvesTop High Yield Corporate Bond (AMEX: HYG) exchange - traded fund has dropped around 10 % in that pe
yield on the iShares iBoxx InvesTop High
Yield Corporate Bond (AMEX: HYG) exchange - traded fund has dropped around 10 % in that pe
Yield Corporate Bond (AMEX: HYG) exchange - traded fund has dropped around 10 % in that period.
Growth in U.S. real GDP would fall 2.7 % over the three years that follow a vote, with a corresponding decline of 13.1 % in U.S. equities and a contraction of 0.53 %
on the
yields in U.S.
corporate bonds.
He lost money because a lot of other funds have made money gambling
on corporate junk
bonds that are
yielding about 6.5 % now.
Spreads between
yields on highly - rated
corporate bonds and government
bonds rose slightly over the past three months (Graph 54).