Displaying items by tag: bonds

(New York)

Even before the pandemic and subsequent crisis, the high-yield Muni market failed to deliver the returns after taxes that the corporate bond market…view the full story on our partner Magnifi’s site

(New York)

Bond market investing hasn’t seemed so attractive recently as rates on even long-term government debt such as the 10-year Treasury hit lows…view the full story on our partner Magnifi’s site

(New York)

If investors’ eyes are watering from the big jump in yields over the last month, no one could blame them. The steep rise has sideswiped markets and until today, sent the Nasdaq into a full blown correction, with the rest of the market down strongly too. So how can investors protect their portfolios from losses because of yield jumps? One asset class to consider are rate hedged ETFs, such as the ProShares Investment Grade-Interest Rate Hedged ETF (Cboe: IGHG) and ProShares High Yield Interest Rate Hedged ETF (Cboe: HYHG). Both funds go long corporate bonds and short Treasuries, which allows them to remove rate risk, but still keep the benefit of income streams from the underlying corporate bonds.

FINSUM: Rates usually rise when the economy is improving, as is happening now. In these periods, corporate bond spreads usually tighten. So this type of ETF allows you the benefit from the increasing attractiveness of corporate bonds while also protecting against interest rate risk.

(New York)

The bond market is a powder keg that may have only started to explode, says ING. “The bond market has been sitting on a powder keg since last week. Attitude towards duration among fixed income investors has grown cautious, to put it mildly”, says Padhraic Garvey, regional head of research for the Americas at ING. “In this context, we do not blame investors for exiting at the first sign of a sell-off”, he continued.

FINSUM: Investors are currently terrified about inflation and it is hitting Treasury yields and tech stocks squarely on the chin. Our opinion is these fears are overblown and this is a market overreaction, especially as it regards tech stocks. These stocks are losing despite the fact that underlying fundamentals strongly favor the growth of tech earnings.

(New York)

Treasury yields have risen significantly over the last few weeks. So much so that equities have been absolutely hammered. This has stoked a lot more interested in bonds generally because yields are rising back to more palatable levels. However, thus far, corporate bonds have been getting wounded during the Treasury yield surge. Top bond indexes, like the SPDR Bloomberg Barclays High Yield Bond ETF and the iShares iBoxx $ High Yield Corporate Bond ETF, have each seen major selloffs, with over 1% losses in a single day. Many analysts think that the rise in yields may curtail some corporate debt issuance.

FINSUM: So the immediate view for corporate debt is bearish, but in the medium term it is much brighter. As yields stabilize at higher levels there will be stronger investor demand, and coupled with less issuance, you will have a tight market.