Junk is in the news!
That's right! I am quite fixated on junk these days and have more to bring!
Coming from the folks at Bloomberg, junk bonds have seen a 1.5% decline over the past month, which includes $9.9 billion pulled from mutual funds that invest in junk. According to the article, the most plausible reason why investors are pulling out of the junk-bond market is due to their rising costs.
Accordint to BoA, since 2008, every-time junk-bonds have lost value they have rebounded right back and delivered an annualized return of 17.3% for the period.
From Bloomberg: "The 6.2 percent yield on junk bonds is 2.7 percentage points below their decade-long average, yet 3.2 percentage points more than investment-grade securities, about the most since October, according to Bank of America Merrill Lynch index data."
Just an fyi: the junk bond market is currently valued at about $1.6 trillion versus the estimated $12 trillion treasury market.
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