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"A food fight" for new junk bond offerings is the result of investors' quest for yields as...
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Monday, August 6, 2012, 10:10 AM ET"A food fight" for new junk bond offerings is the result of investors' quest for yields as high-yield fund managers struggle to put to work $43.1B of inflows thus far this year. The money is pouring in as debt sales slow - off 54% since May. "Demand is intense," says corporate bond vet Marty Fridson. "It's become tough to buy acceptable quality paper."
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It will be quite ugly.
I do think we are headed towards a severe bond crash considering:
1 - Bonds are returning less every month with some funds approaching rate of inflation even at a high risk profile.
2 - Stocks may not be the greatest in the world, but they aren't falling through the floor.
If the government decides to tax all capital gains as income, then I suspect stocks will become wildly volatile as there will be no value in "buy & hold" and Mutual Funds will have lost a majority of their reason for being. We can expect a shift to individual stocks and even more ETFs.