BTC iShares iBoxx USD High Yield Corporate Bond ETF

Rebalancing your portfolio means bringing the portfolio back to the asset allocation levels specified in the financial plan. Not rebalancing can expose you to higher risk.

After September’s strong jobs numbers, a Fed rate hike could be on the horizon early next year. Russ explains two equity market implications.

BUTCHER: Thank you. Do you see any specific opportunities today? COLBY: I think there are two fairly distinct opportunities for investors to consider. One is based on interest rates and interest rate outlooks. The other is based on risk that investors might be willing to assume on a credit basis. From an interest rate perspective, […]

Issuance slowed to a trickle when market conditions were unfavorable in August. A number of transactions were either postponed, re-priced, or withdrawn from the market altogether. There was an increase in high-yield debt risk perceptions.

High yield debt markets saw $6 billion worth of new supply issued across 12 transactions in the week ending October 24.

A bond ETF is managed by a human (sometimes several). A common misconception about bond ETFs is that they simply hold all the securities in the index they track.

In an environment of generally decent, albeit recently disappointing, growth and gently rising yields, high yield offers attractive potential in a yield-starved world.

ETNs are free of tracking errors, and investors can defer taxation until they mature or are sold.

Many structural considerations are likely to keep yields low in the future. Demand for Treasuries and bonds is likely to be more than the supply in the next two years.

After several weeks of record outflows, investors start regaining trust Fund flows gauge where most investors are moving their money. While following this indicator assumes momentum strategies work, in weeks of high inflows, there will be a delay between the time when funds come in and when managers can invest them in assets, so they […]

In this article, we’ll discuss how the Fed’s Odyssean and Delphic guidance in March has impacted financial markets.

Despite a holiday-shortened week, issuance volumes for leveraged loans surged by almost 49%, week-over-week, to $21.3 billion.

High market volatility usually increases risk perceptions for junk bonds (PHB). This increases spreads and yields. As a result, bond prices decrease.

High yield bond issuance activity gained traction last week on improved Market sentiment. The total US dollar-denominated issuance of high yield debt is $60.8 billion in 2016 YTD.

The total returns on municipal debt came in at 3.32% in the first quarter of 2014, as measured by the Barclays Municipal Bond Index.

Along with the two suggestions mentioned in Part 6 of this series, Narayana Kocherlakota also dropped in two additional suggestions for improving the FOMC framework statement.

Municipal bonds (or munis) were the best performers in 2015 with returns of 3.2%. Meanwhile, investment-grade corporate bonds (LQD), long-dated Treasuries (TLT), and high-yield bonds (HYG) all gave negative returns in 2015.

Where’s the relative value within fixed income? High yield bonds appear relatively attractive.

AngloGold’s net debt fell by 32% in 1H16 over 1H15, mostly due to the sale of its Cripple Creek & Victor mine to Newmont Mining for $820 million.

The US leveraged loans market saw an allocation of ~$19.0 billion worth of senior loans across 22 transactions in the week to May 8.

The Fed also embarked on three rounds of quantitative easing (or QE). Now, the Fed is looking to decrease the size of its bloated balance sheet.

Easier borrowing conditions stimulate business investment among firms. Higher investment would generate employment and benefit firms’ revenues and profits.

Junk bonds are high yield bonds issued by below–investment grade corporations. Due to the low ratings and high risk of default attached to these bonds, they’re popularly called “junk bonds.”

High-yield, or junk-rated, bonds have higher yields than investment-grade bonds—like U.S. Treasuries and high-quality corporate debt. They’re issued by borrowers with higher credit risk—for example, with a lower ability to service the debt issued. Investors need a higher return to compensate for the higher risks involved.

This article considers the halfway mark improvement in the U-4 labor data and the implication for fixed income investors.

Richard Fisher believes that the Fed needs to tighten policy. This is based on the improved labor market and inflation outlook. He also believes that continued monetary accommodation is causing signs of “financial excess” in certain asset classes. He spoke earlier about signs of froth in high-yield bond (JNK) (HYG) markets.

The BofA Merrill Lynch U.S. High Yield Master II Index increased by 0.34% over the week ending June 20, and is up by 5.64% so far this year (up to June 20).

Last week brought the total US dollar-denominated issuance of high-yield debt to $66.5 billion in 2016 YTD—47.0% lower than the same period in 2015.

The price at which bonds are breaking for trading in the secondary market shows a clear downtrend year to date. The price at which bonds are placed with initial investors is given by the original issue discount (OID) and sets the bond’s yield to maturity. The break price, on the other hand, refers to the […]

Jeffrey Gundlach also warned about the high-yield market (HYG) (JNK). He said the “clock is running out” for energy companies (IEZ) due to low oil (USO) prices.

Investors seeking exposure to investment grade or high yield corporate debt have increasingly been using fixed income ETFs.

With the Brexit fallout, the Federal Reserve will most likely delay the next interest rate hike until the end of this year or even next year.

With monetary policy a huge driver of investment performance, all investors need to be fluent in “Fedspeak.”

Oil prices are expected to be lower for longer. This is bad news for high yield bond funds (HYG) (JNK) in the United States.

The large high yield bond issuance was the second largest over the past two months and the highest in number of issuances  Weekly issuance can help gauge both the demand and supply of the high yield bond market. New bonds increase the supply available to investors in the secondary market and the demand given indicates […]

Investors could consider hedging their short-term duration risk (HYG: 3.98 years, JNK: 4.20 years) with a short position in longer-dated bonds.

Puerto Rico’s labor force participation rate was about 40% in April, 2014.

Bond markets are experiencing rising yields due to higher economic growth expectations. However, the 10-Year Treasury yield was still low at 2.4% on March 29, 2017

Should interest rates rise equally in the five-year part of the yield curve as the 20-year part of the yield curve, HYG and JNK would likely decline roughly 3.98% and 4.20% in value.

Since 2008, the Fed’s monetary policy has been extremely accommodative. However, as the recovery progresses, there are increasing calls for policy normalization.

Volatility, or the index commonly known as the “fear factor,” surged over 34% to 17.03 in the week ending August 1—this was the highest level in almost four months.

Even among those who have jobs, the fraction of people working part-time but who would like to work more hours is higher than the historical average.

Monetary policy has been one of the main catalysts of this bull market. These returns were mainly aided by the ultra easy monetary policy.

The Fed’s main policy tool, the funds rate, has been at near zero levels since December, 2008.

The Intraday Indicative Value gives us a more real-time value than the bond ETF’s NAV. It’s considered an implied value of an ETF.

The correlation between the S&P 500 Index and Treasuries has been -0.55 over the last five years.

This article considers the trade-offs between high-quality, low-yielding fixed income opportunities and lower-quality higher yields in the current improving economic environment.

Hanesbrands issued Ba2/BB rated dollar-denominated junk bonds worth $1.8 billion on May 3. It will use the proceeds of the loan for refinancing purposes.

Under the current uncertain economic circumstances, investors searching for higher yield might turn to fixed income.

Adding carry to your portfolio in a low-return scenario could cushion your portfolio.

Secondary market activity in high yield debt mutual funds High yield debt (HYG) mutual funds recorded their second consecutive weekly inflow. Net flows into junk bond (JNK) funds came in at ~$1.6 billion in the week ending October 31. Net flows into high yield bond (PHB) mutual funds are down by ~$2.3 billion so far […]

In 2015, AngloGold sold a mine to Newmont for $820 million. It used the proceeds to buy a part of its high-yield bond, which lowered its net debt.

High yield bonds have come under pressure lately, and as a result, are now looking relatively attractive. Spreads recently widened out to the highest level in a year.

High yield issuance last week rebounded sharply from the past two weeks’ lows. Issuers took advantage of strong market conditions for debt offered at relatively low borrowing costs.

For investors, the implications are not to load up on bonds, but to tactically look for areas of relative value within fixed income.

The high volatility regime will likely be the norm in the future. State Street observed that the US market has already clocked 42 highly volatile days in 2015.

The pursuit of higher employment, in terms of both labor and resources, often involves a loose monetary policy.

While the short duration aspect of both JNK and HYG might seem attractive to investors wary of rising rates, investors should bear in mind that both HYG and JNK also have significant credit risk.

Strong weeks of issuance signify an overall bullish market. High yield issuance for last week was at its strongest so far in 2014.

The three US stock indexes that we review in this weekly series rose from July 5–12, 2016. Robust US jobs data boosted investor sentiment and eased the fear of an economic slowdown.

Continued from Part 2 Because Bernanke will step down, there’s great speculation on who will replace him So who is it likely to be the next Bernanke? The case for Summers Between the two, Summers certainly has more excitement building around him than Yellen. Summers also has Wall Street credibility—at least more so than Yellen. […]

The uncertain global environment created after the Brexit vote made investors hope for a perpetual low rate environment. The prospect of further easing from central banks in the developed markets has spurred strong demand for government debt.

Rising US-China trade tensions have caused all assets, and especially bond markets, to move considerably over the last few sessions.

The start of 2016 has been marked by an increase in the quantum of fallen angel bonds in the high-yield bond market (HYG) (JNK).

Bonds and stocks are negatively correlated. This is why bonds can act as a ballast in your portfolio, and thus the case for bonds is still strong while building with buffer.

HY EM bonds currently offer higher yields than both high yield US corporate bonds (HYG) (JNK) and high EM sovereign bonds.

Select areas of the EM debt sector hold good potential, as many of these countries exhibit low leverage levels and are currently funded through year-end.

The risk-return metric for ten-year Treasuries (IEF) are lowest, but also the safest, with a paltry 1.3% volatility and with an average yield of 4.1%.

Being a large capitalist economy with relatively smoothly functioning markets, some degree of inequality is expected.

Increasing correlations between risky assets could leave your portfolio vulnerable.

E-commerce and payment solutions provider First Data Corporation (FDC) issued junk bonds worth $3.4 billion on October 29. This was the largest issue of October.

After rising sharply the previous week, the issuance for the high-yield bonds dropped to $8.6 billion for the week ending on May 16 compared to $10 billion for the week ending on May 9.

The three US equity stock indexes we review in this weekly series were mostly flat from August 11–18, 2016. This came after the minutes from the July 26–27 FOMC meeting.

Fostering price stability is one of the Fed’s most important goals.

Manufacturing growth appears to be steady in the Fifth District. Although new orders declined sharply month-on-month, firms remained upbeat for business prospects.

Know how XLY outperformed rest of the ETFs on risk-adjusted basis, closely followed by DEF.

The US leveraged loans market saw an allocation of $14.0 billion worth of senior loans across 15 transactions in the week ended May 1. This was 38.3% higher than the week before.

The Fed’s balance sheet size has bloated to $4.3 trillion as on May 14, 2014, compared to pre-crisis level of $870 billion seen on August 1, 2007.

Consumer confidence, while low, is improving. During the first half of 2014, the Conference Board’s measure of consumer expectations averaged a little below 82, a material improvement from the previous four years.

This week, the Fed’s third Federal Open Market Committee (or FOMC) meeting of the year will be held on April 29–30—always a market-moving event.

Last week, Elliott Management filed its 13F for the first quarter of 2020. In the last quarter, the hedge fund’s AUM was worth around $73.15 billion.

The corporate bond market is divided into two broad categories: the high grade market and the high yield market.

Bond investors should understand the difference between Corporate Bonds and Treasuries. Below is a list of the key differences between the two.

Jeffrey Gundlach expects 2019 to continue to be a volatile year. The last quarter of 2018 was quite volatile after a prolonged calm in the markets.

At the end of Q3 2019, D.E. Shaw & Co.’s total portfolio of publicly traded securities was worth around $81.2 billion.

High-yield bonds gained popularity due to higher yields compared to Treasury bonds, whose yields were being pushed down by the Fed’s interest rate policy.

The December 2015 rate hike was the first since the 2008 global meltdown. Now the Fed is hinting at the first rate hike of the year to come in December 2016.

Equities and high yield bonds perform well when the economy is improving, and both underperform when the economy is slumping.

According to the American Society of Civil Engineers, the US has to spend ~$3.6 trillion by 2020 to make needed infrastructure improvements. This should mean more municipal bonds (MUB) will be issued to help finance these projects.

High-yield debt could do well, but there are risks. The Fed shifting toward more contractionary monetary policy poses two risks to high-yield debt.

The FOMC is made up of hawks and doves, and their balance could affect future policy. Investors who follow the Fed need be able to tell the differences.

The fund flows for last week once again plummeted as investors remove cash from bonds ahead of the FOMC meeting. Fund flows are key in determining the sentiment of investors towards a given asset class. Weekly fund flows measure how much cash investors put into and remove from mutual funds focused on investing in high […]

High yield bond flows for last week posted the first outflow in five weeks, possibly signaling weak investor confidence Fund flows are the best indicator of investor demand in the high yield bond market. Naturally, an increase in investor demand is reflected in increased bond prices and lower yields. When demand falters, issuance is diminished […]

Bond prices and interest rates have an inverse relationship. If an interest rate increases, the price on a bond declines, and vice versa.

Bonds are highly sensitive to credit risk—other than U.S. Treasury securities, which are more prone to interest risk. Credit risk hugely varies.

Credit ratings assess the credit-worthiness of a borrower and assign a grade based on the borrower’s business operation and financial stability.

New issue volumes for high yield debt rose 13.3% week-over-week to $6.8 billion across nine issues in the week ending October 31. Issuance had come in at $6 billion across 12 deals in the week ended October 24.

According to the Securities Industry and Financial Market Association, SIFMA, the total U.S. fixed income market size is about $38.6 trillion.

Credit rating measures the credit-worthiness of a debtor with respect to its financial and operational stability. Rating agencies such as Moody’s and Standard & Poor’s specialize in rating credit to government agencies and corporates.

Leveraged loans (BKLN) are almost always secured or backed by a specific pledged asset or some form collateral. On the other hand, high yield bonds (JNK) may be secured or unsecured.