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Junk Bonds are Looking Increasingly Fragile

Junk Bonds are Looking Increasingly Fragile

(New York)

Despite good stock market returns and rising rates, investors have apparently been just as hungry for yield. The average yield for a junk bond is currently 5.5%, well below the ten-year average of 8.3%. While prices have risen and gains have been solid this year, many long-time junk investors are cashing out, with 20% of high yield investors in May reporting that they held below average positions. The divergence between sentiment and prices apparently is caused by geopolitical discord, which is causing a flight to bonds. "No one is really comfortable with current valuations, but you have a fear of selling a bond because you may not be able to buy it back tomorrow", says a high-yield strategist at Bank of America.

FINSUM : Junk bonds are overpriced, but then again so is most everything else.

  • junk bonds
  • rates
  • yields
  • valuations

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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