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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)
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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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Yield Chasers Beware: Cautionary Outlook on Junk Bonds |
Seeking Alpha - June 5, 2011 - By Parsimony Investment Research
As investors clamor for yield in a low nominal interest rate environment, demand for high yield bonds (a.k.a. junk bonds) has increased since the market lows in 2009. However, money flow into this asset class went negative this past week as equity markets have softened.
We believe that investors should be cautious towards this asset class because we feel that the recent strength has primarily been due to "yield chasers". Investors seem to focus on the yield spread as opposed to the risk profile of these investments. The high yield bond market is priced to near perfection. We recommend selling your positions in the SPDR Barclays Capital High Yield Bond ETF (JNK), iShares iBoxx $ High Yield Corporate Bond ETF (HYG), and PowerShares Fundamental High Yield Corporate Bond Portfolio ETF (PHB) (or at least tighten your stop loss).
High yield bonds remain sensitive to the overall economic environment which is experiencing some recent softness. Investors are being lulled into the safety of these bonds with default rates plummeting to multi-year lows. According to Moody’s Investor Service, the default rate for high yield bonds is expected to fall to 1.9% by the end of 2011 down from 3.1% at the end of 2010 and 13.1% at the end of 2009 (which is clearly already priced into the bonds). However, if default rates start creeping up again, junk bond prices will definitely suffer.
Bond pricing and investor appetite is highly sensitive to default rates (see chart of JNK below, click to enlarge). Junk bonds got crushed when default rates spiked in 2009.
For the complete article.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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