Taper all but certain amid fixed income excesses


"If Bloomberg reporters see it, so does the Fed," writes Josh Brown, commenting on a story about excesses in fixed-income (AGG. BND).

So-called covenant-light loan issuance has soared to $155B YTD, beating the 2007 record of $96.6B. Junk bond (HYG, JNK) sales are up 24% YTD vs. the same period a year ago. Sales of payment-in-kind notes (PIK) - in which borrowers pay interest not with cash but with more debt - of $6.5B YTD are on track to top 2012's $8.1B. Bonds sold with the lowest tier CCC rating made up 10.3% of high yield bond YTD, the most since 2011.

"Taper's a lock folks," concludes Brown ... "And it couldn't come soon enough."

The 10-year Treasury yield is off 1 basis point today to 2.57%.

Related ETFs: LAG, SCHZ, BOND, SAGG, MINC,HYG, JNK, PHB, HYLD, HYS, SJB, UJB, SJNK, ANGL, BSJG, BSJH, BSJI, QLTC, XOVR.

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Comments (3)
  • The_Hammer
    , contributor
    Comments (5027) | Send Message
     
    those instituitions and managers buying these pik and bubble bonds should be fired
    12 Aug 2013, 02:59 PM Reply Like
  • Zeus2012
    , contributor
    Comments (714) | Send Message
     
    It's not their fault if investors keep shoving money at them. What are they going to do, keep them in short dated treasuries?
    13 Aug 2013, 12:02 AM Reply Like
  • The_Hammer
    , contributor
    Comments (5027) | Send Message
     
    what are they going to do?? How about acting like a responsible professional fiduciary?
    13 Aug 2013, 07:05 AM Reply Like
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