The 5% yield barrier on junk bonds (HYG, JNK) is broken for the first time ever, the Barclays...


The 5% yield barrier on junk bonds (HYG, JNK) is broken for the first time ever, the Barclays U.S. High Yield Index sliding to 4.97% (prior to Jan., the yield had never fallen below 6%). Spreads to Treasurys remain at a not-unreasonable 406 bps, far wider than the record-tight 223 points reached just as the gates of financial heck were about to open in 2007. In the meantime, the equity of highly non-wobbly companies like RDS.A, VOD, and GSK yields in the area of 5%. "We don't want to question the market," writes the FT's David Keohane, "but: what the (heck)?"

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Comments (7)
  • bbro
    , contributor
    Comments (11216) | Send Message
     
    Savings Deposits (getting practically nothing in yield) to GDP is now 42%....previous recorded high before the recession was 34.4% in the
    4th qtr 1964....
    8 May 2013, 12:41 PM Reply Like
  • WMARKW
    , contributor
    Comments (10786) | Send Message
     
    Cash in Mattress vs. GDP is also at record highs.
    8 May 2013, 03:09 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (33736) | Send Message
     
    (Junk) bonds are more direct substitute for the MBS, treasuries which the FED buys, hence they are more directly affected.

     

    Everything is artificial.
    8 May 2013, 01:35 PM Reply Like
  • TwistTie
    , contributor
    Comments (2429) | Send Message
     
    Hello.

     

    I have VOD and GSK, and both are yielding over 5% for me.

     

    I'm not exactly how big the dividend actually is because I don't do "pence" very well.

     

    I wish somebody could convince me that GRMN is not going to wobbly.
    8 May 2013, 01:47 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (3413) | Send Message
     
    What does this signal mean with the direction of the economy?

     

    In general yields in Junk Bond signal early investor moves.

     

    Is the direction heading south or north?
    8 May 2013, 03:32 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (3413) | Send Message
     
    Here is my 2 cents.

     

    Money is rushing in to Junk Bonds since late 2011. Yields keep going down ever since.

     

    It is heading north forming a bubble; then when the bubble bursts, it will head south.

     

    Does this make sense? The question then is, when will it hit bubble territory? Anyone?
    8 May 2013, 07:49 PM Reply Like
  • zhouzy
    , contributor
    Comments (7) | Send Message
     
    when it crosses the line it forms bubble...now it is.
    10 May 2013, 04:08 AM Reply Like
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