Investment Grade Corporate Bonds Holding Up Well

Even though equity markets have pulled back since the June 12th top, investment grade corporate bonds have continued to perform well. Below is a year-to-date price chart of LQD, which is an ETF that tracks the investment grade corporate bond market. Since bottoming in early March, the ETF has been in a very strong uptrend, bouncing off of the bottom and top of an upward sloping channel as it has worked its way higher. While the S&P 500 is off more than 7% from its recent high, LQD is on the verge of breaking out to a six-month high.

click to enlarge

Comments

[MadScientist:]

It also pays a dividend ($0.46 per month, or about $5.5% annually at its current price tag of $100.50). Not bad.

Jul 10 12:07 AM

[BOK:]

amen on that! That's why I own it too...


On Jul 10 12:07 AM MadScientist wrote:

> It also pays a dividend ($0.46 per month, or about $5.5% annually
> at its current price tag of $100.50). Not bad.

Jul 10 10:18 AM

[Emerald:]

In a deflationary period, invetment grade bonds and conservative dividend-paying stocks are the best investments. I moved to intermediate term investment grade bonds six months ago and have decent cash flow. Long: Ginnie Mae's, AGG, Vanguard Short term invesrtment grade bond fund, Pimco Total Return fund. Stocks are being set up for a 10-15% corretion as second quarter earnings turn the "green shoots" into "mud balls". Despite all the noise on CNBC's pump and dump network, the consumer is tapped out and no one is borrowing. Banking and housing are crawling along the bottom for the next year. Invest for cash flow and you will sleep well at night.

Jul 10 11:11 AM

[richjoy403:]

I too own corporate bonds (and no Treasuries or Agencies).

However, though I am somewhat more constructive on stocks than what I see above, I respect the more conservative views expressed above.

Jul 10 12:17 PM

[patarattat:]

shorting long term treasury via TBT has been a good trade and should continue to work with the massive infusion of Gov bond auctions and inflation just ahead, but it is volatile so take profit when you can ( all ultra bull or bear ETF's only work as short term trades, not buy and hold investments). Also just buying individual AA or A rated corp. bonds with 6 to 7% yields is a pretty safe place to park some cash without the "toads wild ride" of some bond ETF's in the last 12 months. Right now there are a slew of historically high dividend paying stocks, like BP, NS, HTS, LINE, along with the sedate SDY, VIG, VYM, and other easy to use ETF's. When buying individual stock for it's dividend make sure it is not poised for a big pull back after the nice run we've had or that 5% yield won't seem so wonderful. This is where paying attention to trading ranges and doing your homework matters.

Jul 11 08:06 PM