April 13, 2021
The recovery has boosted the junk bond market as investors saw investment-grade bonds and government debt perform poorly in Q1. All but 10% of high yield debt is within five percentage points of Treasuries. This has put a squeeze on the possibilities of the return in the high yield market but it’s the only fixed income market with any possibility of gains. But Goldman sees junk bonds going higher despite this, and that a growing economy with additional stimulus should provide an environment that produces good returns for more risky corporations. Additionally, junk bonds are uncorrelated with Treasuries and aren’t a hedge but diverse in a portfolio with
investment-grade and government debt.
(New York)
FINSUM + Magnifi: The fixed income market has had a tough Q1, but junk bonds were the answer then and they will be the answer moving forward.
Other news today: Gold Bulls See Second Stimulus Package as Tipping Point for Another Run and This Sector is at Huge Risk from Biden’s Tax Plan
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