FYI: Bad news for bonds. Friday’s market action brings us a CCCrash, more lackluster bond sales, and investors pulling cash from bond funds. Treasuries were lower across most maturities, pushing yields on the benchmark 10-year note up five basis points (or five hundredths of a percentage point) at 3.178%. Long-term yields rose more than short-term yields, moving against the trend this year. Asian currencies rose against the dollar on news that the White House has asked U.S. officials to start drafting a proposal for a trade deal with China. The South Korean won posted the biggest gains of 31 major currencies, according to Bloomberg, and the yuan rose 0.4% against the dollar. Here are more happenings and ideas in the bond market today:
•What a CCCrash. The high-yield market’s lowest-rated tier has struggled since early October. CCC-rated bonds “have lost 3.25% in total and 3.50% in excess returns,” according to Bank of America Merrill Lynch strategists, “effectively wiping out five months of performance.” The bonds at the top of the high-yield’s credit-quality ratings scale have posted 1.8% of excess returns, 1.2% of which came from the past week alone. High-yield bond issuance remained slow as well, and one sale even got pulled, BAML writes.
Regards,
Ted
https://www.barrons.com/articles/investors-are-quitting-bond-funds-while-the-lowest-tier-of-junk-wipes-out-1541174634?mod=djem_b_Weekly barrons_daily_newsletter
