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Thursday, October 23, 2014

WSJ on The Rebound of the High Yield Bond Market

Junk Bonds Rally

Plunge in Yields on Government Debt Fuels Resurgence

Junk bonds have bounced back after their steepest decline in more than a year as investors once again push aside concerns about overheated prices in pursuit of higher-yielding investments.
Portfolio managers are snapping up speculative-grade debt after a selloff that last week took the yield of a major index above 5% for the first time since the “taper tantrum” of mid-2013. Yields rise when prices fall
Have performance chasing individual investors been selling while professional investors have been buying ? The article notes:
Some $19.2 billion has been withdrawn from U.S.-based high-yield bond funds and exchange-traded funds, according to fund tracker Lipper. The record annual outflow was $7.1 billion in 2005.

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