Highlights The headwinds of rising high-quality bond yields and increasing new issuance have slowed the advance of high-yield bonds in late October 2014, relative to stock market gains. Nonetheless, we expect high-yield bonds may improve as economic expansion, earnings growth, and low defaults continue to drive our positive outlook. We continue to expect a challenging,…

Highlights The Fed will end outright bond purchases this week, barring any surprises from this week’s Fed meeting. The end of bond purchases should not create much market reaction, as bond investors focus more on global economic growth and expectations for interest rate hikes. The Fed’s breakup will not be a clean one as it…

Highlights Yields may remain low for evidence of any fallout or contagion to the U.S. economy; a stretch of stronger economic data or bolder action by overseas central banks are likely needed catalysts for higher yields. The on-guard mentality in the bond market has pushed back timing for Federal Reserve interest rate hikes. Although yields…

Highlights Inflation expectations have fallen sharply in recent weeks, driven by European disinflation, lower energy prices, and overall growth concerns. The persistence of low inflation expectations may intensify the “lower for longer” theme via lower growth expectations and delays to potential Federal Reserve (Fed) interest rate hikes. Disinflation Infatuation Inflation expectations have dropped sharply and…

Highlights A challenging bond market environment will likely persist over the remainder of the year and perhaps beyond. Valuations across many bond sectors remain above historical averages and reflect an expensive market. We believe corporate bonds may provide investors with the best defense in what will likely be a continuation of the low-return environment. Slowing…

Highlights Multiple factors, none of them fundamental, have driven high-yield bond prices weaker in September. Performance versus investment-grade bonds is approaching an extreme and may signal a reversal. Late Summer Setback The end of summer has been less than kind to the high-yield bond market. A challenging month of September for the bond market has…