Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Click for Bio

Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube
 

  The Search For Yield In the Bond Market
Posted Under: Bond Market
Supporting Image for Blog Post

 

View from the Observation Deck 

  1. Today's blog post shows where some major bond index yields stood at the close of 6/30/16, and also where they closed in June over the past three, five and seven years. 
  2. The U.S. economic recovery began in Q3'09, according to the National Bureau of Economic Research.
  3. We believe that the information in the chart can help investors establish realistic expectations with respect to the amount of risk one needs to assume in the current climate in order to capture a desired rate of return (yield).
  4. There are eight major index categories in the chart and five of the seven that hold taxable bonds were either near or below the Consumer Price Index − Core Rate, which excludes food and energy prices, at the end of June. That rate stood at 2.30%, according to Bloomberg. 
  5. One of the goals of investing in bonds is to generate enough yield to outpace the rate of inflation. Despite that being easier said than done in the current climate, investors have not shied away from investing in bond funds.
  6. Investors funneled an estimated net $45.18 billion into Taxable Bond mutual funds and exchange-traded funds for the 12-month period ended June 2016, according to Morningstar. That figure was $47.87 billion for the Municipal Bond category.

This chart is for illustrative purposes only and not indicative of any actual investment. Investors cannot invest directly in an index. The U.S. Treasury: Intermediate Index includes public obligations of the U.S. Treasury with maturities ranging from 1 to 9.9999 years. The GNMA 30-Year Index covers agency mortgage-backed pass-through securities (both fixed-rate and hybrid ARM) issued by the Government National Mortgage Association (GNMA). The U.S. Municipal Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. The U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM Passthroughs), ABS, and CMBS. The U.S. Intermediate Corporate Index is a broad-based benchmark with maturities ranging from 1 to 9.9999 years that measures the investment grade, U.S. dollar-denominated, fixed-rate, taxable corporate bond market. The U.S. Corporate High-Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. The Barclays Global Aggregate Index is a flagship measure of global investment grade debt from twenty-three different local currency markets. The Barclays Emerging Markets Hard Currency Aggregate Index is a flagship hard currency Emerging Markets debt benchmark that includes USD, EUR, and GBP-denominated debt from sovereign, quasi-sovereign, and corporate EM issuers.

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

Posted on Tuesday, July 19, 2016 @ 1:10 PM • Post Link Share: 
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


 PREVIOUS POSTS
Stocks at All-Time Highs But It's Just Second Hand News
Stocks Ended July 15, 2016
US Economy and Credit Markets Ended July 15, 2016
Health Care Stocks Are Mending Slowly
A Snapshot Of S&P 500 Index Dividend Increases In The Current Bull Market
Stocks Ended July 8, 2016
US Economy and Credit Markets Ended July 8, 2016
S&P 500 Index Stock Prices Relative To Their 52-Week Highs
Commodity Prices Up Sharply In Q2’16
Stocks Ended July 1, 2016
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.
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 © 2022 All rights reserved.