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It's an easy market to hate, but junk bond prices (HYG, JNK) keep going higher, the yield on the...

It's an easy market to hate, but junk bond prices (HYG, JNK) keep going higher, the yield on the benchmark BAML index hitting an all-time low of 5.084%. The spread to Treasurys - treading water for awhile at 475 bps - has broken through that resistance, and is now at 4.33%. The Fed's role here is well-documented, but the latest meme has the BOJ's easing efforts as forcing a fresh wave of cash into the sector.
Comments (8)
  • northhills24
    , contributor
    Comments (1588) | Send Message
     
    HYG seeing highs of 2007... I have sold off small amounts at what I thought were the new highs and here we are just moving higher.. Many bears on this ETF in the past year. Still holding long position. HYG becoming a growth position?? as div drops.
    6 May 2013, 02:59 PM Reply Like
  • northhills24
    , contributor
    Comments (1588) | Send Message
     
    I have been using HYG to stash cash since 2011. Never expected this run up, however I have sold some shares to take advantages of dips .. increasing div and growth. Would def not be a buyer of HYG at these levels . My cost basis is $85.
    7 May 2013, 09:24 AM Reply Like
  • 7of9
    , contributor
    Comments (325) | Send Message
     
    I'd hold on to hyg at least until the QE infinity ends.
    6 May 2013, 05:20 PM Reply Like
  • HPBunker
    , contributor
    Comments (219) | Send Message
     
    Don't you reach a point where rapid principal loss is possible due to callability of the underlying bonds? In this complacent market, I wouldn't count on my fellow investors not to bid up bond prices way above call values...
    6 May 2013, 05:26 PM Reply Like
  • GizmoA51
    , contributor
    Comments (116) | Send Message
     
    Yea, I'm convinced, I'm putting my money in the bank at .075% almost guaranteed. (No, not really)
    6 May 2013, 05:50 PM Reply Like
  • Ray Merola
    , contributor
    Comments (3357) | Send Message
     
    Over time, I have tended to watch the spreads versus the yield. My benchmark is when the spread between U.S. Treasury 10-year bonds and the Baa bonds is less than two percent, it's time to ease on out the door.
    6 May 2013, 07:00 PM Reply Like
  • Brad Kenagy
    , contributor
    Comments (1571) | Send Message
     
    My view is similar to yours, I watch this chart: http://bit.ly/107Gt1p

     

    When the spread reaches around 2.5% to 3% that is historically when it has been time to sell. Its currently at 4.33% so still aways to go.
    6 May 2013, 10:44 PM Reply Like
  • Ray Merola
    , contributor
    Comments (3357) | Send Message
     
    Yes. Looks like the same church, different pew.
    6 May 2013, 11:05 PM Reply Like
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