Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

Junk Bonds Get Trashed

December 28, 2018 By Jeremy Jones, CFA

By sebra @ Shutterstock.com

Investors are running from junk bonds, with spreads widening to the highest levels since 2016, and junk bond funds losing suffering withdrawals of $11 billion over just the last six weeks alone. At Bloomberg, Kelsey Butler reports on the rout:

Pummeled by expectations of slower growth, outflows and dropping oil prices, junk bonds are poised for their worst returns in more than seven years.

High-yield bonds are returning -2.64 percent in December, on track for the worst month since September 2011. The asset class has lost 2.59 percent so far this year, set for the biggest loss since returns fell 4.47 percent in 2015, according to the Bloomberg Barclays High Yield Total Return Index.

“Expectations around global growth are slowing, so fundamentally that impacts credit, most notably in lower rated credits.” said Joel Levington, director of credit research at Bloomberg Intelligence. “Secondly, you have large outflows of cash from ETFs, so technically, the sector has faced pressure as well. Lastly, the B tier is composed with a large amount of energy credits, so the drop in oil prices has an immediate impact there as well.”

Funds that invest in high-yield debt have seen massive outflows as investors have fled risk assets, yanking $11 billion from the funds over the past six weeks, according to Lipper.

As returns have remained negative, high-yield spreads have risen this month to the widest level since the summer of 2016, and yields this week hit the highest level in 32 months. Most big banks see junk bonds having a better year in 2019. Return expectations for the coming year range from 0.5 percent on the bearish end to 6 percent to 7 percent on the bullish side.

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • Junk Bonds go Bonkers
  • Goldman Warns on Junk Bonds
  • Sentiment on Junk Bonds Nearing Mania Threshold
  • Author
  • Recent Posts
Jeremy Jones, CFA
Jeremy Jones, CFA, CFP® is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Richard C. Young & Co., Ltd. was ranked #10 in CNBC's 2019 Financial Advisor Top 100. Jeremy is also a contributing editor of youngresearch.com.
Latest posts by Jeremy Jones, CFA (see all)
  • Jim Simons’s Renaissance Technologies vs. Internet Forum Traders - January 15, 2021
  • Biden Plans to Spend Trillions More on COVID-19 Stimulus - January 14, 2021
  • Overtaken By Nvidia, Intel Fires Bob Swan - January 13, 2021

Search Young Research

Most Popular

  • Do You Remember When NASDAQ Dropped by 82%?
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • Gavekal Chairman: Renewables Bubble is "Stupidest" Ever
  • Don’t Be on Their Radar, Get Out of Debt Now
  • Democrats Eager to Get Back to Protecting the Rich by Ending SALT Deduction Cap
  • Stocks: Are You Sticking Your Neck Out Too Far?
  • H2O, Skiing, Hiding A$$ET$, Bitcoin, Ammo & More
  • Overtaken By Nvidia, Intel Fires Bob Swan
  • There's Always a Way Forward for Americans Like YOU
  • The Power of a Compound Interest Table

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • Insurrection Was the Furthest Thing from Trump’s Mind
  • Who Are Those Urging Violence?
  • Are $2,000 Checks Going to Rebuild NYC?
  • An Alert for Warm Weather, Wine Loving Mavens.
  • Key West’s Number One Restaurant: The Thirsty Mermaid
  • VIDEO: Henry U.S. Survival AR-7
  • Cancel Culture, the Great Purge, Double Standards
  • How Are You Doing on a Local Level?
  • We Support Censure of Flake, McCain and Ducey
  • Zinc: The Gatekeeper of Immune Surveillance.

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Social Media

  • Facebook
  • Twitter
  • Youtube
  • Pinterest

Copyright © 2021 | Terms & Conditions

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.