Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Corporate Bond Rally Picks Up Momentum

05/22/2020 | 02:46pm EDT

By Sam Goldfarb

U.S. corporate bonds were poised Friday to wrap up their best week in more than a month, reflecting investors' hopes for an economic rebound and support from the Federal Reserve.

As of Thursday, the average extra yield, or spread, investors demand to hold speculative-grade corporate bonds over U.S. Treasurys was 6.81 percentage points, according to Bloomberg Barclays data. That was down 0.76 percentage point from the previous Friday -- on track for the biggest weekly decline since the week ended April 17.

The average spread on investment-grade corporate bonds also was down the most since that week, having tightened 0.23 percentage point to 1.85 percentage points.

Various market gauges on Friday suggested relatively little change to those levels.

Blackrock's iShares U.S. high-yield corporate-bond exchange-traded fund was recently up around 0.2% while its investment-grade ETF was down less than 0.1%. Moves among newly issued bonds also were mostly muted. AT&T Inc.'s new 2.75% 2031 notes recently traded with a spread of 2.05 percentage points, having been issued Thursday at a spread of 2.1 percentage point, according to MarketAxess.

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 0.654%, according to Tradeweb, compared with 0.677% Thursday. Yields fall when bond prices rise.

Actions taken by the Fed have played a major role in lifting corporate bonds, many investors and analysts say. Data released by the central bank late Thursday indicated it bought around $1.5 billion of corporate-bond ETFs in the week ended Wednesday. That brought its total holdings to $1.8 billion after it started buying the securities early last week.

Perhaps inspired by the Fed, individual Investors also have been pouring money into bond funds. Net inflows into high-yield funds totaled $1.6 billion in the week ended Wednesday, bringing the three-week total to nearly $10 billion, according to Refinitiv Lipper.

Some of the momentum in the corporate-bond market has been self perpetuating, said Bill Zox, a portfolio manager at Diamond Hill Capital Management.

"If you're insuring too much against the massive amount of uncertainty ahead of us, you're just falling farther and farther behind in this rally," he said.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
BEST INC. -5.19% 1.28 Delayed Quote.-37.25%
CHANGE INC. -0.82% 3030 End-of-day quote.-14.04%
LETS HOLDINGS GROUP CO., LTD. -1.79% 7.12 End-of-day quote.-8.48%
LOOK HOLDINGS INCORPORATED -3.23% 1497 End-of-day quote.56.43%
Latest news "Economy & Forex"
12:40aAUSTRALIA : taking China to WTO over wine tariffs enables negotiations
RE
12:05aPBOC-backed newspaper advises against liquidity tightening speculation
RE
06/19UK's Sunak considers cap to annual pension rise - Sunday Times
RE
06/19Chevron returning offshore workers, restarts output halted by U.S. storm
RE
06/19INGRID BROCKOVÁ AT THE TIDEWATER MEETING OF MINISTERS FOR INTERNATIONAL COOPERATION : “The private sector is a key source of innovations, investments and economic sustainability in development cooperation.”
PU
06/19UK's Morrisons rejects $7.6 billion takeover proposal from CD&R
RE
06/19U.s. cdc says 149,125,164 individuals have been fully vaccinated against covid-19 as of june 19 vs 148,459,003 individuals as of june 18
RE
06/19U.s. cdc says 176,737,141 individuals have received at least one dose of covid-19 vaccine as of june 19 vs 176,290,249 individuals as of june 18
RE
06/19West African regional bloc adopts new plan to launch single currency in 2027
RE
06/19U.s. cdc says administered 317,117,797 doses of covid-19 vaccine as of june 19 vs 316,048,776 doses administered as of june 18
RE
Latest news "Economy & Forex"