SPDR® Barclays High Yield Bond ETF

In terms of bonds (BND) (AGG), Gundlach has time and again mentioned that there is high-grade corporate debt.

Jeffrey Gundlach believes that if the equities do well this year, emerging market equities will do better than US stocks (SPY) (DIA).

In Bank of America Merrill Lynch’s March 2019 survey, the slowdown in China was cited as the biggest tail risk by the majority of respondents.

After being asked about the timing of the next recession during his interview with Yahoo Finance, Jeffrey Gundlach said that while the global stock market (ACWI) peaked on January 26, 2018, US markets (SPY) hung on until October.

In Bank of America Merrill Lynch’s February 2019 survey, trade war concerns remained the top tail risk cited by global fund managers for the ninth consecutive month.

Spreads narrow when the economy improves and there is a lower chance of a default, causing junk bond prices to rise and yields to fall.

As reported by CNBC, according to the Bank of America Merrill Lynch survey for January, hedge fund managers’ chief concern is corporate leverage.

As reported by Reuters, Jeffrey Gundlach called the ballooning US (SPY) (VOO) federal government debt “a completely horrific situation.”

Currently, one of the questions on the minds of most investors is whether we are entering a recession.

If we turn back the clock to before the recession, we find that US debt levels weren’t this high, and unconventional programs like quantitative easing helped the economy recover from the Great Recession.

The recent market turmoil that shook investors’ confidence has settled for the time being, but…

The report from the Joint Committee on Taxation included an estimate of budgetary deficits for 2018–2027. Tax reforms could have a limited impact in 2018.

In September, the Federal Reserve announced it will trim its $4.5 trillion balance sheet.

Investor flows in high yield bond funds were positive for the third successive week last week, but their volume fell sharply.

VanEck Higher Yield and Lower Duration Compared to U.S. high yield bonds, emerging markets high yield bonds offered a 90 bps yield pickup as of June 30, 2017.[1.U.S. high yield bonds and emerging markets high yield bonds are represented by BofA Merrill Lynch US High Yield Index and BofA Merrill Lynch Diversified HY US Emerging […]

Since fallen angel bonds were given investment-grade status earlier, they typically have higher credit quality than most other speculative-grade bonds.

VanEck  Given these uncertainties, high yield bond investors may want to ratchet up the credit quality of their portfolios. Fallen angels can be a source of higher quality high yield for investors, given about 77% of the universe was concentrated in BB-rated bonds (just one ratings notch below investment grade) as of April 30, 2017.[2.Composite […]

The FOMC has stuck to the script written by markets (SPY) and left interest rates unchanged at its May meeting.

AB Keeping Pace with Equity Returns over Time In fact, when we widen the lens to take in the last three decades, high-yield bonds have nearly matched equity performance. And they’ve done it with much lower volatility. Since July 1983, stocks have produced an annualized return of 10.9% (Display 1). High-yield bonds have nearly equaled […]

AB Summing It Up High-yield bonds present an alternative for investors at an uncertain crossroads. Equity valuations seem attractive based on some measures, but volatility has led many investors to search for ways to temper the risk in their portfolios. At the same time, bonds—a popular risk reducer—are less attractive than normal due to extremely […]

AB Is This a Global Story? In our view, designing a high-yield allocation today should involve a global perspective. Our analysis focuses on US high-yield bonds, in large part because this market provides a lengthier historical data set than other high-yield markets do. But the global market for high-yield bonds continues to expand and evolve: […]

AB Are Rising Rates a Risk? Investors thinking about introducing high-yield bonds into an asset allocation might ask if it’s the right time to invest in them. With interest rates at historic lows, won’t there be substantial risk to high-yield bonds when rates begin to rise again? It’s a fair question, and there are risks […]

AB High Yield in the Portfolio Framework Given their higher risk levels, we’d expect that stocks would continue to outperform high yield over the long run. However, high-yield bonds have clearly demonstrated that they bring much to the table if they’re combined with stocks in a carefully designed and maintained portfolio. But not every investor […]

AB Rebalancing in the Tails Because stocks have been so much more volatile than high yield, periodic portfolio rebalancing tends to occur during performance extremes—the “tails” in return distributions—when the gap between high-yield and equity returns is wide. This magnifies the “buy-low, sell-high” effect that rebalancing contributes to a portfolio’s performance. Of course, the gaps […]

AB A Place at the Asset-Allocation Table For investors seeking to control volatility in their equity portfolios while still maintaining return potential, high-yield bonds could represent an effective solution. A typical approach to moderating equity volatility is to reallocate assets to the greater stability of investment-grade bonds, or even cash. But this can exact a […]

AB Looks Are Deceiving But even though high-yield bonds look like other bonds, they don’t necessarily act like other bonds. This insight can have important implications for how investors consider them in an overall portfolio context. High-yield performance patterns, for example, don’t track those of other fixed-income sectors very closely over the long term. Looking […]

Municipal bonds were the worst-performing bond class in 2016 after solid returns in 2014 and 2015, and high-yield bonds (JNK) outperformed.

Donald Trump’s corporate tax plans have the potential to infuse immense liquidity in the economy.

Gold and oil are good hedges against inflation. While gold usually outperforms, if inflation rates rise along with interest rates, it might gain as much.

Higher inflation erodes the value of future coupon payments. Inflation has more of a negative effect on bonds with later maturities.

Negative bond yields in Japan and low Fed funds rates in the United States and the Eurozone were one reason emerging market bonds performed well in 2016.

The uncertainty surrounding the Trump administration has led to a rise of almost 10% for gold since its ten-month lows in December 2016.

Long-Term Outlook Remains Positive for Gold Bull Market Our view on the long-term gold price is unchanged. We see the recent weakness as a consolidation phase within what we believe is the early stages of the next bull market for gold. We continue to believe dislocations created by the unconventional policies being implemented by central […]

Long-Term Outlook Remains Positive for Gold Bull Market Our view on the long-term gold price is unchanged. We see the recent weakness as a consolidation phase within what we believe is the early stages of the next bull market for gold. We continue to believe dislocations created by the unconventional policies being implemented by central […]

Higher Rates Not Always Negative for Gold A Fed rate hike in December appears almost fully priced in already. The common argument is that higher rates are negative for gold given that it is a non-yielding asset. Yet, following the first rate hike of the current tightening cycle in December 2015, gold has advanced more […]

According to Richard Bernstein, “Few investors seem to appreciate the magnitude of the opportunity cost of avoiding equities.”

Negative bond yields in Japan and the Eurozone, coupled with very low federal funds rates in the United States, are part of why emerging market bonds and currencies have performed so well in 2016.

While Donald Trump wants to get rid of the Dodd–Frank Act, especially the Consumer Financial Protection Bureau, Hillary Clinton wants to retain it.

Investors have once again flocked to bonds, the Japanese yen, and gold due to the 10.0% fall in China’s exports and concerns over a major rejig by the central banks.

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.

The correlation between oil and high-yield bond indexes is very high. Where oil goes, high-yield bonds follow.

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.

Yields on high-yield debt (HYG) (JNK) and spreads between high-yield debt and Treasuries both fell over the last year.

In this series, we’ll see why emerging market bonds are looking attractive, how the Market has gained position this year, and the risks emerging market bond investors face.

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.

The total US dollar-denominated issuance of high-yield debt stands at $56.9 billion YTD in 2016—29% lower compared to the same period in 2015.

The rise of the actively selective investor becomes more nuanced within the context of our entire ETF universe.

EchoStar (SATS) is a global provider of satellite and video delivery solutions. It issued junk bonds worth $1.5 billion on July 20.

A QE program doesn’t just create inflation; it causes asset prices to rise as well. After the financial crisis of 2008, the Fed resorted to an ultra-accommodative monetary policy.

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

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.

About 75% of fallen angel bonds (ANGL) were rated BB as of May 31, 2016. Original-issue investment-grade bond issuers tend to be larger.

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

Investor flows into high-yield bond funds were negative last week. According to Lipper, net outflows from high-yield bond funds totaled $562 million in the week ended May 25, 2016.

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

According to Lipper, net inflows from high yield bond funds totaled $1.1 billion in the week ended May 18, 2016.

Upbeat new home sales data boosted investors’ sentiments about US economic recovery, causing US equity indexes to rise from May 17 to May 24, 2016.

Investor flows into high yield bond funds were negative last week for the second consecutive week. Net outflows from high yield bond funds totaled $1.9 billion.

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.

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

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).

High-yield bond funds regained some lost favor this year. Fallen angel bonds could be an extremely attractive value proposition for investors.

Gundlach prefers mortgages versus the high-yield bond market. He identifies inherent risks when investing in the high-yield market.

In a webcast in April, Jeffrey Gundlach suggested that mortgage-backed securities are what investors should be looking at right now.

Investor flows into high-yield bond funds were positive last week. Net inflows from high-yield bond funds totaled $296 million in the week ending April 27.

Widening spreads indicate a slowing economy. Since companies are more likely to default in a slowing economy, credit risk related to their bonds rises.

Prime Security Services is a subsidiary of Apollo Global Management (APO). It issued junk bonds worth $3.14 billion on April 20.

The sharp decline in crude oil prices led to defaults among high-yield bond issuers from the energy sector. Exposure to the bonds hurt funds that invest in them.

Net outflows from high yield bond funds totaled $545 million in the week ended March 30, 2016, the second-lowest outflows year-to-date.

Yields on high-yield debt and spreads between high-yield debt and Treasuries rose over the week ended March 24, 2016.

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, […]

Yields on high yield bonds, as measured by the BofA Merrill Lynch US High Yield Master II Effective Yield, have fallen since early March. They ended March 15 at 8.39%.

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

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

Increasing correlations between risky assets could leave your portfolio vulnerable.

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

Most people in the US haven’t realized that half of the population doesn’t go to work in the morning. We’re seeing a major demographic shift.

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.

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

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.

First Data Corporation aims to make payment transactions secure. It issued dollar-denominated junk bonds worth $3.2 billion last week.

High volatility in financial markets ensured low activity in the primary market of high-yield bonds in October. Dollar-denominated high-yield debt amounting to $9.4 billion was issued in October 2015.

Credit markets tend to improve when the economy is improving. The possibility of a default on corporate bonds (LQD) drops, thus causing their yields to fall.

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

Adding bonds across credit classes helps diversify your bond portfolio. The weight of each category depends on your risk appetite and the business cycle.

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.

Altice N.V. issued $4.8 billion in junk bonds on September 25 in a three-tranche issue. The same day, Olin Corp. issued $1.22 billion in junk bonds in two tranches.

Junk bond issuers came back to the primary market in the week ended September 11, 2015, after two weeks of no issuance.

While higher volatility is here for the foreseeable future, the selloff has created a number of potential opportunities for investors with longer-term holding periods.

The US leveraged loans market saw an allocation of $1.025 billion worth of senior loans in the week ended August 28.

High-yield bond issuance has clearly fallen as 2015 has progressed. For most of the first five months of 2015, issues related to refinancing needs dominated the primary market for high-yield bonds.

Investors should note that high-yield bonds are risky securities to begin with. The add-on risk of widening spreads may not suit all types of investors.

According to data from S&P Capital IQ/LCD, the US leveraged loans market saw an allocation of $10 billion worth of senior loans in the week to August 7.

Investor flows in high-yield bond funds were negative last week. They were negative for the second week after three successive weeks of inflows.

Junk bond issuance activity rose in the week ending August 7 after two weeks of subdued activity. The broad market conditions improved.

High-yield bond issuance rose in the week ending August 7, 2015, to the most in three weeks, as market conditions improved.

The US leveraged loans market saw an allocation of $16.2 billion in senior loans in the week ending July 31. This was sharply higher than the $9.3 billion priced in the week ended July 24.

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.