The damage to high yield (junk) bonds as a pure investment has been meaningful, the iShares $14bn US high yield corporate bond ETF has fallen over 8% already this year, not a great return for an investment asset class often deemed to be more conservative than stocks. The simple trouble is when interest rates rise bonds fall because their fixed yield becomes comparatively less attractive than what’s on offer from safer vehicles plus if liquidity is drying up it’s the riskier end of town that gets avoided first.
MM is neutral high yield bonds short-term
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