SPDR® Barclays High Yield Bond ETF

Today, most measures of credit conditions are positive, with tight spreads across all of fixed income. Even high yield spreads have come in after a short scare last month.

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

Investor flows into high-yield bond funds were positive for the week ended July 6, 2016, after three consecutive weeks of negative outflows.

Investor flows in high yield bond funds turned positive last week. Net inflows totaled $906 million in the week ended May 22.

Unlike the previous week, last week, issuers swarmed the market with repricing deals. Nearly half of the deals were refinancing.

Not only are young individuals scared of investing in equities, they’re also hoarding cash under the mattress in case a similar crisis should reoccur.

A bullish week Last week was yet another bullish week for the leveraged loan market. A total of 12 deals priced almost $13 billion worth of leveraged loans (BKLN). Extremely robust pipeline The forward pipeline stood at just over $50 billion at the close of last week. This level is the second highest since last […]

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, […]

In the current market environment, Bill Gross recommends staying plain vanilla. His advice is to avoid high-risk markets.

Net inflows in high yield bond mutual funds were negative for the second time in eight weeks. Net outflows totaled $1.0 billion in the week ended March 20.

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 A number of transactions were either postponed, re-priced, or withdrawn from the market altogether.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.

AlixPartners provides financial advisory and business services. It issued leveraged loans worth $1.1 billion last week. The B2/B+ rated covenant-lite Term Loan B was issued for seven years.

Key implications of the Fed’s QE3 exit for junk bonds and leveraged loans The Fed’s policy statement at the end of its October Federal Open Market Committee (or FOMC) last week stressed the improving economy. In a first, it also mentioned that measures of labor market slack had reduced. The risk of inflation falling persistently […]

Wage growth could cause rates to rise. A hike in wage rates could boost consumption and encourage individuals outside the labor force to join. This will increase disposable income.

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

Diversification: Finally, companies in frontier markets tend to just focus on demand in their local countries and thus are less tied to the global economy than emerging markets like China and Brazil. As my colleagues Del Stafford and Daniel Morillo pointed out last fall in blog posts, this means frontier markets have exhibited a low […]

AECOM Technology (ACM) is an engineering and construction company. It had the week’s largest issue. ACM plans to use the proceeds from the issue to repay existing debt.

The primary loan market remained busy with opportunistic issuers coming in to test the investor’s interest for floating interest rate loans.

Carl Icahn has stated that “BlackRock is an extremely dangerous company,” as it doesn’t understand the risks of its actions.

The three-month Volatility Index (or VIX), which measures the implied volatility of options on the S&P 500 stock market index, is approaching record lows.

If you’re Matt Tucker, everything reminds you of investing, even the last barbecue of the summer. Read on to discover how your bond portfolio may very well resemble a Labor Day mixed grill.

Lack of growth in major emerging markets has contributed to the commodity price slide. Gundlach stated, “Emerging markets might fall an additional 40% — my recommendation would be to short them.”

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

Investor flows in high yield bond funds were in positive territory last week.

While yields continue pushing lower, volume is starting to slow down, which may affect the performance of leveraged loans in coming months. Weekly loan volume is a valuable gauge of the activity in the leveraged loan market. The volume represents the new supply of loans to the secondary market. The existing supply is affected by […]

MDC Partners (MDCA) offers marketing and communication network services. It issued dollar-denominated junk bonds worth $900 million on March 18.

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 […]

Mega caps outperform small caps when interest rates rise. The last two rising rates scenarios took place during the late 90s and in the mid-2000s.

If you had to sum up investing in the US markets after the Great Recession in a few words, you would probably say something like “the quest for yield.”

Yields on high yield debt decreased by 24 basis points or 0.24% over the week ending October 24, to come in at 5.98%.

Investor sentiments favored the U.S. equity and high yield bond market The Vanguard Total Bond Market ETF (BND) has rallied almost 1.5% since the start of the year and was down by 11 bps last week. In line with that, the Power Shares Senior Loan Portfolio (BKLN) ETF, which mainly tracks the leveraged loans, reported […]

While no longer cheap per se after their extraordinary run in 2014, municipal bonds continue to look attractive versus both Treasuries and corporate bonds.

Credit spreads are the difference in yield between U.S. Treasuries and corporate bonds of the same maturity. Corporate bonds yield more than Treasury bonds, as they carry a risk of default.

The Fed currently uses considerable staff resources in monitoring financial markets for risks arising from financial instability.

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

Record low U.S. Treasury rates continue to push investors to find yield elsewhere, and it seems that corporations are rushing to meet the demand. Matt Tucker explains.

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

In just four weeks, the high yield bond flows amounted $9 billion in outflows. Fund flows are a good gauge of investor sentiment towards an asset class. Large outflows, such as the $900 billion one four weeks ago, should have been a good enough warning sign that something was going on, even if you were […]

Favor credit over duration as interest rates rise. Look for tactical opportunities within fixed income.

Last week, the leveraged loan market (BKLN) had an inflow of $411 million compared to $600 million inflows in the previous week.

High-yield or junk bonds are issued by borrowers that have a lower ability to service their debt obligations. They’re rated BB+ and below—according to Standard & Poor’s credit ratings system.

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.

Continued from Part 3 Leveraged loans remain resilient On leveraged loan land (BKLN), the high volatility of the bond markets (BND) doesn’t seem to exist. While high yield bond issuance (JNK) has been up and down depending on the weather, leveraged loans have remained relatively resilient over the past month. Steady volumes, aggressive issuance Volumes last […]

Contrary to high yield bonds (HYG), leveraged loans posted a better-than-expected week.

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

Junk bond issuance activity was subdued in the week ended July 31 as issuers remained wary of the volatility in the commodities markets and the fall in Chinese equities.

The high yield market had its largest ever weekly outflow Fund flows are strong indicators of investor confidence and offer insight into changing views within the investor community. Whether it is sharp reversals or steady flows, the weekly flows are important to understand the weight investors assign to different market events and changing conditions. Last […]

Continued from Part 5 Cause for concern? With the issuance volumes across the high yield bond market and the leveraged loan market, the market seems like it should be back on a healthy note. On the other hand, the strong outflows in the high yield market the previous week are a reason for concern. August […]

When the economy is expanding, corporate revenues and profits increase. Corporate delinquencies usually fall and the high-yield debt issuers’ debt-coverage ratios improve.

Both leveraged loans (BKLN) and high yield bonds (HYG) have a similar investor base, with the exception of banks in leveraged loans.

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

And though the 10-year yield recovered somewhat Thursday as Treasury prices dropped, Wednesday’s dip below 2% came as a surprise.

High yield bonds (JNK) are also in the doghouse High yield fund flows reversed significantly last week after two strong weeks leading up to the FOMC (Federal Open Market Committee) meeting. The question now is whether these outflows were temporary caution prior to the meeting, or if investors have packed up and left for sure. High yield (HYG) fund […]

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.

The policy statement following the recent Federal Open Market Committee (or FOMC) meeting held on March 18–19 received diverse reactions from policy makers and the investment community.

At the September meeting, the Fed announced that it would taper monthly bond purchases by another $10 billion. The monthly bond purchases would be $15 billion per month starting in October. Monthly bond purchases would now consist of $10 billion in longer-term Treasuries (BND) and $5 billion in agency mortgage-backed securities.

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

Leveraged loan (BKLN) mutual funds continued to see investors exit for the eighth consecutive week, with net outflows of $457 million last week.

Last week ended on a similar mood as the previous week. Issuers continued to supply bonds to the hungry market. High yield issuance ended the week 26% higher than the previous week.

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).

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.

Flex more muni muscle with a flexible municipal fund. “Unconstrained” investing has gotten quite a bit of press this year.

Collateralized Loan Obligation (or CLO) deals continued to thrive. Four CLO deals totaling $2 billion came through in the week ending November 7.

Treasury yields fell across the yield curve last week after the US Department of Labor reported that the economy added fewer jobs in April.

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

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 should focus on dividend growth equities (IYLD) for alternative sources of income. Dividend-paying stocks can act as a cushion in this low-yield world.

Junk bond yields fell 18 basis points week-over-week and ended at 8.38% on March 11, 2016.

Last week was dismal in terms of volume for both bonds and loans given the short week and anticipation of a Fed minutes release Weekly volumes are good indicators of market strength. The high yield bond market volumes have fallen significantly since May due to the speculation of the earlier-than-expected tapering of quantitative easing. Fed […]

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.

Excessively low rates have side effects. Treasury yields have been beaten down due to the Fed’s excessive buying. Currently, the ten-year Treasury (IEF) yields are 2.1%.

The decadent offering of barbecued ribs at a weekend party is similar to that of high yield fixed income investments. By taking on greater risk of spilling sauce on your shirt you have the experience of a true summertime staple…

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.

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.

For those who want a little more adventure on their menu, there’s always the option of adding some unique flavors like spicy kebabs. This is the equivalent of adding some emerging markets fixed income to your bond portfolio.

While M&A activity was still below market prospects, demand for dividend recapitalization deals was mostly strong last week.

If high duration drove the bond sell-off, why did loans follow suit? High yield bonds and leveraged loans are the two main asset classes composing the sub-investment grade called “fixed-income debt capital markets.” High yield bonds are defined as bonds rated below BBB-, and leveraged loans are those paying over L+125 basis points or rated […]

Investor flows into high-yield bond funds were negative last week. According to Lipper, net outflows from high-yield bond funds totaled $1.8 billion.

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.

A major disagreement among Fed economists is how to classify unemployment in the economy. Unemployment can be caused by cyclical or structural factors. A number of Fed officials, including Janet Yellen, believe that there’s evidence of significant “labor market slack.” This is caused by cyclical factors.

The graph above shows the history of the federal funds rate. The federal funds rate is a tool that the Fed uses to control the interest rate.

Preferred stocks have typically seen the highest yields in the investment-grade universe, which makes them an attractive alternative to other high yielding securities.

Rates on high yield bonds continued to back up last week, and the yield on the BofAML HY Bond Index is now at its highest point in 2013. This is a negative catalyst for non-investment grade companies with debt funding needs.

The S&P 500 Index (SPY) was positively affected towards the end of the week due to market perceptions that the crisis in Ukraine may be easing as Russia called off military exercises near Ukraine. The Index had been down lately due to geopolitical fears in the Middle East and Russia.

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.

Returns on leveraged loans trended down in the week ended March 13. The S&P/LSTA U.S. Leveraged Loan 100 Index fell by 0.2% over the week ended March 13.

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

This article takes a closer look at the changes in the discouraged worker data and considers the implications for fixed income investors.

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 […]

Know why the high yield bond market rebounded after two weeks of consecutive outflows.

Corporate bond issuance in the U.S. reached $1.4 trillion in 2013, according to the Securities Industry and Financial Markets Association (SIFMA), a new record.

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.

After the 2008 financial crisis and Great Recession, U.S. monetary policy has been designed to boost economic growth and create jobs. The Fed has kept the federal funds rate at near-zero levels since December 2008.

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.