24/7 Wall St. has not been covering the junk bond market as much of late because spreads were in a narrow range for quite some time. That was then. The 10-year Treasury note hit a 2.80% yield in the middle of this week and has only just now find buying support enough to bring it back under 2.8% again. This marked the highest yields since mid-September as the worries are growing all over again about when the bond purchasing will begin to be tapered.
Amazingly enough, yield spreads in junk bonds have tightened. This may be somewhat hopeful ties to stocks challenging record highs again. Defaults have also been very limited of late, giving junk bond investors more confidence that they won’t be holding thin air rather than an 8% bond coupon.
What really stands out though is that S&P reported that its composite speculative bond grade spreads have tightened back to 464 basis points. This was just 471 basis points the prior day and 478 basis points just a week ago.
What the implied translation comes to is that junk bonds may be holding up better than treasuries across the board. The spread was also 464 basis points back on November 11. The speculative spread was closer to 500 basis points just in early October.
The SPDR Barclays High Yield Bond (NYSEMKT: JNK) is the key ETF we follow around junk bonds. Its implied dividend yield is over 6% and at $40.48 its 52-week range is $38.21 to $41.95. If spreads were widening out, the performance would be far worse.
We will be spending more time on this matter if the markets warrant it after Thanksgiving.
The Average American Is Losing Their Savings Every Day (Sponsor)
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.
Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.
But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
