It’s Heaven for Bond Investors
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While the market rallied for the last few years, one strange thing was happening. The spread between yields on corporate bonds and government bonds was virtually non-existent. This means investors weren’t paid much for the risk they took on for getting into corporate bonds.
A few months ago, I said this simply couldn’t last. The market always goes back to the norm. So either government yields would drop, corporate yields would rise, or both would happen.
Well thanks to the credit crunch, corporate bond yields are much higher now. A quick search through Yahoo finance was showing bonds from strong companies paying out yields of seven to eight percent.
Seven to eight percent!
And if you want to take on some risk, you can easily find bonds (non-junk) trading as high as ten percent.
If you’re a bond investor, now is one of the best times to get into some high yielding bonds. But you should hurry. After the market calms down again, yields should move lower once again.
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Tags: Bond Market, Corporate Bond Yields, Corporate Bonds, Credit Crunch, Government Bonds, US stocks, YahooAbout the Author
Charles Delvalle is a self-taught market-timing professional and value analyst who uses a combination of technical indicators and fundamental research to achieve consistent gains on stocks, commodities and options.
Charles is also a staunch contrarian and takes pride in finding undervalued sectors and discovering great companies on the cheap. He questions government reports and the status quo. In addition to swing trading options, Charles is also Co-Editor of the monthly advisory service - INCOME.
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