Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  It’s Time For Another Look At The Bond Market
Posted Under: Bond Market
Supporting Image for Blog Post

 

View from the Observation Deck 

  1. Today's blog post is an update of one we did on 1/9/14 and 5/27/14. Since 5/27/14, bond prices rose in four of the seven major categories featured in the chart. The other three dipped slightly. 
  2. Investment-grade bonds, in particular, appear to have benefitted the most from the 65 basis point decline in the yield on the 10-Year Treasury Note (T-Note) in 2014 (thru 8/25).
  3. Despite the strong rebound in real GDP growth in the U.S. in Q2'14 (+4.0% annualized), investors have shied away from speculative-grade debt, such as leveraged loans (bank/senior loans) and high yield corporate bonds. 
  4. Bank loan and high yield corporate bond funds (open-end) reported net outflows totaling $1.9 billion and $7.9 billion, respectively, in July, according to data from Morningstar.
  5. Year-to-date through July, net outflows for bank loan and high yield corporate bond funds (open-end) totaled $175 million and $784 million, respectively.
  6. Investors are having to navigate through some mixed signals. So far in 2014, it looks as though the economic weakness in Europe trumps the U.S. recovery, in our opinion.
  7. Weakness in Europe has pushed European government bond yields to such low levels that yields on U.S. bonds look attractive by comparison.
  8. The yield on the 10-Year T-Note in the U.S. is around 2.39%, compared to 0.95% and 1.29% for Germany and France's 10-Year government securities.
  9. We intend to continue monitoring the comments from the Federal Reserve and the events in Europe.


This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The BofA Merrill Lynch 22+ Year U.S. Municipal Securities Index tracks the performance of U.S. dollar denominated investment grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions, in the U.S. domestic market. The BofA Merrill Lynch Fixed Rate Preferred Securities Index tracks the performance of investment grade fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market. The S&P/LSTA Leveraged Loan Index tracks the performance of a broad cross section of leveraged loans, including dollar-denominated loans to overseas issuers. The BofA Merrill Lynch 7-10 Year U.S. Treasury Index tracks the performance of U.S. dollar denominated sovereign debt publicly issued by the U.S. government in its domestic market. The BofA Merrill Lynch U.S. High Yield Index tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. The BofA Merrill Lynch U.S. Corporate Index tracks the performance of U.S. dollar denominated investment grade corporate debt publicly issued in the U.S. domestic market. The BofA Merrill Lynch Global Corporate Index tracks the performance of investment grade corporate debt publicly issued in the major domestic and Eurobond markets.

To Download a PDF of this post, please click here.

Posted on Tuesday, August 26, 2014 @ 2:41 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
Tracking The Retail Investor’s Appetite For High Yield Corporate Bonds
Europe…A Distinction With A Bit Of A Difference
The Dog Days of Summer
Biotechnology And Internet Stocks Appear To Have Passed The “Bubble Test”
What Investors Did During the Correction
A Snapshot Of Major Emerging Market Stock Indices
Interview with Bob DeRochie
Snapshot Of U.S. Equity Styles/Market Caps
Master Limited Partnerships (MLPs) Have Shined Since The Start Of The New Millennium
It’s Time To Look Ahead To 2015
Archive
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.