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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
|
3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
|---|
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Why do sometimes high yield bonds drop with the S&P? |
Market Realist - April 26, 2013 - By Senior Credit Analyst
Not all bonds are created equal, and high yield bonds have a high correlation with the market
Investors flee to bonds when the equities markets drop, so why did the high yield bond market fall as well? The simple answer is that not all bonds are created equal. High yield bonds, investment grade corporate bonds and Treasury bonds are all different, and the main difference is credit risk.
Credit Ratings
High yield bonds are corporate bonds with ratings below BBB- and high grade (or investment grade) bonds are corporate bonds with ratings of BBB- or higher. Treasury bonds are issued by the U.S. government, which has a rating of AA+ after being downgraded by S&P and Moody’s in 2011.
Ratings measure the credit risk, or the probabilio ty that an issuer will default on its debt or its interest payments. Of the three categories above, Treasuries are the safest asset and high yield bonds are the least safe. A flight to true safety means shifting investments to Treasuries, not to high yield bonds.
Q1 earnings panic
When the market dropped on April 15th after realizing that the Q1 earnings season was going to be a trip to the slaughterhouse, investors fled to safety. The price on high yield bonds is driven partially by Treasuries and partially by the corporate market health.
Bond prices move up when yields drop, but the yield of a bond is composed of the benchmark Treasury bonds for the given maturity plus a spread. The spread is relative to the additional risk for investing in a sub-investment grade corporate bonds versus investing in the Treasury itself.
While Treasury rates contracted with the equities drop, the spreads to Treasuries widened since poor corporate earnings will affect corporate bond prices negatively. Since the ratings of investment grade corporate bonds are higher than those of high yield bonds, they were affected less.
For the complete article.
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| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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