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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
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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
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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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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Junk bonds' treasure |
dallasnews.com - Oct. 11, 2010 - by Will Deener
The rally in junk bonds just won't quit.
For those who may have missed it, high-yield corporate bonds soared 58 percent last year – more than double the return of the stock market. This also was the best year ever for the high-yield sector.
So coming into this year, many market prognosticators thought most of the juice had been squeezed from that orange. But the rally in junk bonds has continued well into this year, with the sector up an additional 11.8 percent so far. (Bonds rated BBB and higher are considered investment grade; those rated BB and lower are noninvestment grade, otherwise known as junk.)
The Barclays High Yield bond index is yielding close to 8 percent, so the sector could easily post an annual return of 14 percent to 15 percent, said Gibson Smith, co-manager of the $2 billion Janus High Yield Bond fund.
"We remain positive toward high yield and think the rally will continue," Smith said. "Corporations are continuing to pay down debt and improve liquidity, and a lot of people are trying to grab yield."
Two reasons account for the rally. First, bond yields spiked into the stratosphere in late 2008 when it looked as though the U.S. financial system was on the precipice of collapse.
The spread between yields on risk-free U.S. Treasury bonds and high-yield bonds reached 21 percentage points during this time, compared with a historical average of about 5 percentage points.
When financial Armageddon didn't occur, yields started dropping all through 2009 and into this year. And when yields drop, bonds' prices rise.
Currently, the spread between Treasuries and junk is 6.14 percentage points, which is much closer to the historical average. Investors have made out like bandits as that spread has tightened and prices have risen.
Second, investor demand for junk bonds really began to pick up in spring and early summer of this year as investors began scratching for yield. That's because money market funds were paying almost nothing; bank certificates of deposit were yielding 1 percent to 2 percent and still are; and U.S. Treasury bonds are yielding about 2 percent to 3 percent, depending on their maturities.
"People got tired of earning a quarter percent on their money," said James Weiss, president of Weiss Capital Management in Boston. "The search for yield has driven the rally this year." (As investor demand increased, the yields dropped and as yields dropped, prices moved higher.)
Currently, the average price of high-yield bonds is about 100 cents on the dollar. By comparison, in late 2008 the average price had dropped to 55 cents on the dollar.
While the high-yield market seems to be ginning along nicely at the moment, savvy investors should tread with extreme caution. First, the bond market can adjust quickly, meaning interest rates can rise a lot faster than they fall.
And interest rates don't have to climb much to inflict pain on investors.
If high-yield rates move from 8 percent to 8.5 percent, the price of a bond could drop about 10 percent depending on its maturity.
For the complete article visit www.dallasnews.com/sharedcontent/dws/bus/columnists/wdeener/stories/DN-deenercol_11bus.ART.State.Edition1.248a181.html
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