Bond investors responded to Federal Reserve Chair Janet Yellen’s warnings this week of debt-market complacency by taking on more risk.
The green shoots of inflation are coming at about the worst time for corporate-bond investors.
Treasury five-year notes extended the longest losing streak this year as traders bet improving economic data will push the Federal Reserve to raise rates as early as July 2015.
Investors in exchange-traded funds that buy junk bonds are shifting into shorter-maturity debt that’s less vulnerable to the Federal Reserve’s withdrawal of stimulus measures.
The biggest corporate bond-market returns since 2009 mask a growing sense of unease.
To understand why investors are willingly accepting the lowest yields ever on the riskiest corporate securities, look to Japan.
Treasuries fell the most since March as U.S. employment growth returned to pre-recession levels and the European Central Bank lowered interest rates, sparking demand for the debt of the 18-nation region.
"When the Fed tells me they are concerned about it, I know it's time to leave."
- William Larkin on Jul 22, 2014