Overview: A bird’s eye view of investment-grade bond markets

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U.S. investment-grade bond markets in the week ended October 3

U.S. investment-grade bonds include both Treasury securities, issued by the U.S. Department of the Treasury, and corporate bonds, issued by high-quality corporate borrowers such as Coca Cola Company (or KO) and Oracle Corporation (or ORCL). These companies are rated BBB or above, as per the ratings guidelines provided by credit ratings agency, Standard & Poor’s.

It’s important for investors to stay abreast of investment-grade bond market trends. These trends can provide investors with relatively safer options when market risks and volatility (VXX) increase.

Part 1

In this series

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You’ll read about primary and secondary market action in U.S. investment-grade bonds for the week ended October 3. We’ll cover both Treasuries (IEF) and corporate bonds. We’ll also discuss the major determinants of Treasury yield movements (Parts 7 to 9), both historical and current, and how these impacted both stock (DIA) and bond ETF investments.

We’ll also analyze why 30-year Treasury bonds (TLT) continue to find favor with investors. Parts 10 and 11 will analyze secondary market trends, credit spreads, and the outlook for investment-grade bonds.

Primary market activity in investment-grade bonds

Last week, the U.S. Department of the Treasury auctioned $78 billion worth of Treasury bills. We’ll cover these auctions in detail in Parts 4 to 6. High-grade corporate bond issuance came in at $18.9 billion, dominated by some mega issues. Issuance was partly driven by acquisition activity relating to an SPDR S&P 500 ETF (SPY) component firm.

We’ll cover the major issues in detail and other primary market trends in the next two sections.

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