High Yield Bond Market – Outlook has changed to the positive away from the recent stories of overvaluation and fund withdrawals.

The S&P U.S. Issued High Yield Corporate Bond Index returned 1% last week and a 0.43% the week before to recover the loss incurred the last week of July (-1.38%). Year-to-date the index is returning 5.10%. As entitled in Katy Burne’s Wall Street Journal article: Big Investors Snap Up Junk Bonds, it’s the institutional investors who have stepped up their buying seeing value in current prices after the recent sell-off.

Investment Grade Market – Issuance has been heavy.

Names like American Express, American Water Capital, Burlington Northern, CBS Corp, Motorola, Prudential and UBS came to market.The total market value of the S&P U.S. Issued Investment Grade Corporate Bond Index has increased by almost 10% since the beginning of the year.Month-to-date the index has returned 1.10%, while on the year it has returned 6.76%.

Treasury yields backed off this morning. Yields rose to a 2.38% in response to the easing of geopolitical events after tightening all last week.  The yield of the S&P/BGCantor Current 10 Year U.S. Treasury Bond Index had tightened from a 2.42% to 2.33% last week.The index is now returning 8.34% year-to-date.

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