Connect with us

International

US junk bonds hit by biggest sell-off in over a year

 


U.S. junk bonds fell in November from the biggest drop in more than a year, fearing the spread of the Omicron coronavirus variant could hamper the ability of lower-rated companies to repay debts.

A high yield bond index compiled by Ice Data Services fell just over 1% in November, marking just the second month of this year in which the gauge posted negative total return and its worst result since September of Last year.

The decline was caused by a fall in the price of debt, which offset the interest payments provided by the bonds.

This is one of the clearest indications to date of how the emergence of a new strain of coronavirus has prompted global investors to move away from stocks and corporate bonds that are considered the most important. more vulnerable to the potential blow to the global economy caused by the new variant.

Sales last month were even more severe for the lowest rated segment of the market. Bonds of triple-C and lower-rated companies returned minus 1.4%, reflecting fears that a boom in venture capital funding could be thwarted by tighter monetary policy or tighter social restrictions in response to the new variant of the coronavirus.

Much of the slowdown came on Friday last week, as concerns over Omicron prompted governments to rush to reimpose restrictions in a bid to stem the spread of the infection. Leisure was the hardest hit in the debt market on Friday, with airline bonds suffering as well.

Yet investors had already become cautious earlier in November, as high inflation and decelerating economic growth heralded calls for the Federal Reserve to pull out of its $ 120 billion bond purchase program. per month during the pandemic faster than expected. Comments from Fed Chairman Jay Powell on Tuesday suggesting that the US central bank could speed up its exit from bond purchases added to this nervousness.

The additional yield over very low risk government bonds, or “spread”, for the high yield index fell 3.03 percentage points at the start of the month – slightly above its all-time low – to 3.67 percentage points on Tuesday, its highest level since March. Bond yields move in the opposite direction to their prices.

“We haven’t seen these levels for a while,” said Matt Eagan, portfolio manager at Loomis Sayles. “In the end, the buyer base was not as warm as it used to be.”

Another sign of the sour sentiment towards this asset class, investors pulled $ 2.8 billion from the high yield bond market last week, according to data from EPFR Global, the biggest pullback of a week since mid-March of this year, when inflation fears started to emerge. scare off investors.

Investors also pointed to the seasonal slowdown in Thanksgiving preparation, with traders looking to make profits and reduce risk before trading activity declines, as bankers and portfolio managers pause for trading. vacation.

Despite the sell-off, junk bond yields are still in line with levels from a year or so ago, signaling that borrowing costs will remain near historically low levels for many borrowers.

“It’s quite a change from a stable environment to a sharp decline, but it’s not like it’s a market panic,” said Marty Fridson, chief investment officer at Lehmann Livian Fridson. Advisors. “Without Omicron’s final blow, it wouldn’t have been so bad.”

Not covered – Markets, finance and strong opinion

Robert Armstrong dissects the most important market trends and explains how the best minds on Wall Street are reacting to them. Sign up here to receive the newsletter directly to your inbox every day of the week

Sources

1/ https://Google.com/

2/ https://www.ft.com/content/12e80c41-6d00-43b6-bd52-31e062062f9b

The mention sources can contact us to remove/changing this article

What Are The Main Benefits Of Comparing Car Insurance Quotes Online

LOS ANGELES, CA / ACCESSWIRE / June 24, 2020, / Compare-autoinsurance.Org has launched a new blog post that presents the main benefits of comparing multiple car insurance quotes. For more info and free online quotes, please visit https://compare-autoinsurance.Org/the-advantages-of-comparing-prices-with-car-insurance-quotes-online/ The modern society has numerous technological advantages. One important advantage is the speed at which information is sent and received. With the help of the internet, the shopping habits of many persons have drastically changed. The car insurance industry hasn't remained untouched by these changes. On the internet, drivers can compare insurance prices and find out which sellers have the best offers. View photos The advantages of comparing online car insurance quotes are the following: Online quotes can be obtained from anywhere and at any time. Unlike physical insurance agencies, websites don't have a specific schedule and they are available at any time. Drivers that have busy working schedules, can compare quotes from anywhere and at any time, even at midnight. Multiple choices. Almost all insurance providers, no matter if they are well-known brands or just local insurers, have an online presence. Online quotes will allow policyholders the chance to discover multiple insurance companies and check their prices. Drivers are no longer required to get quotes from just a few known insurance companies. Also, local and regional insurers can provide lower insurance rates for the same services. Accurate insurance estimates. Online quotes can only be accurate if the customers provide accurate and real info about their car models and driving history. Lying about past driving incidents can make the price estimates to be lower, but when dealing with an insurance company lying to them is useless. Usually, insurance companies will do research about a potential customer before granting him coverage. Online quotes can be sorted easily. Although drivers are recommended to not choose a policy just based on its price, drivers can easily sort quotes by insurance price. Using brokerage websites will allow drivers to get quotes from multiple insurers, thus making the comparison faster and easier. For additional info, money-saving tips, and free car insurance quotes, visit https://compare-autoinsurance.Org/ Compare-autoinsurance.Org is an online provider of life, home, health, and auto insurance quotes. This website is unique because it does not simply stick to one kind of insurance provider, but brings the clients the best deals from many different online insurance carriers. In this way, clients have access to offers from multiple carriers all in one place: this website. On this site, customers have access to quotes for insurance plans from various agencies, such as local or nationwide agencies, brand names insurance companies, etc. "Online quotes can easily help drivers obtain better car insurance deals. All they have to do is to complete an online form with accurate and real info, then compare prices", said Russell Rabichev, Marketing Director of Internet Marketing Company. CONTACT: Company Name: Internet Marketing CompanyPerson for contact Name: Gurgu CPhone Number: (818) 359-3898Email: [email protected]: https://compare-autoinsurance.Org/ SOURCE: Compare-autoinsurance.Org View source version on accesswire.Com:https://www.Accesswire.Com/595055/What-Are-The-Main-Benefits-Of-Comparing-Car-Insurance-Quotes-Online View photos

ExBUlletin

to request, modification Contact us at Here or [email protected]