Here are the latest estimates of performance across the various fixed income markets over the past month.
High yield corporate bonds have been the best performer in this near-panic unwind. The reasons include low default rates and strong corporate balance sheets, as well as relatively short maturities and relatively high current income (included in the performance numbers above).
A great deal of this recent outperformance though, has been driven by the strength of the U.S. equity markets. HY spreads tend to have a strong inverse relationship to stock prices.
With HY spread being a significant component of the overall yield, strong equity markets have kept yield increases relatively modest. If equities come under pressure however, all bets are off for HY.
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Junk Bonds Outperforming Other Fixed Income Markets
Published 07/07/2013, 01:06 AM
Updated 07/09/2023, 06:31 AM
Junk Bonds Outperforming Other Fixed Income Markets
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