Search

The article examines the bonds offering high rates of interest known as junk bonds. The high rate of return delivered by these securities in 2009 and 2010 and an increase in the amount of junk bonds issued by corporations in that period are discussed. Possible causes of a future decline in junk bond prices including rising interest rates due to inflation and a preference among investors for stocks should economic development improve are considered.

The article discusses the impact of the automated buying and selling corporate bonds. It mentions that over four-fifths of trading in corporate bonds in U.S. are still conducted in person with a dealer or over the phone. The article mentions that electronic bond-trading was initially limited to trading of American Treasuries but now has allowed investors access to a basket of bonds, according to electronic-trading platform Tradeweb.

The article discusses the expansion of asset purchases for the Bank of England, Bank of Japan, and the European Central Bank from government bonds to embrace corporate debt and equities. Topics include in impact of central banks on the corporate bond and equity markets. Topics include the impact of the central banks' actions on competition among businesses, the impact of central bank investments on share prices, and concerns regarding the central banks' disposal of their holdings.

The article examines the issuing of junk bonds, bonds with lower ratings and higher rates of return, by corporations as debt financing. A trend is considered in which issuing of junk bonds by corporations has increased as demand for yield among financiers is so strong that prices of such bonds have increased and their interest rates paid by corporations have decreased significantly.

The article focuses on the stock market in the U.S. from 2014-2015. It discusses an increase in interest rates imposed by the U.S. Federal Reserve Board on December 14, 2015, the U.S. monetary policy, and an encouragement to investors to acquire risky assets such as corporate bonds and equities. The article also discusses the sharp increase in bond yields and its effect in the U.S. economic activity.

The author offers opinions on the bond market in developing countries. It is stated that the higher prices for corporate bonds of companies in countries such as Brazil, India and Singapore is not necessarily a bubble, as these bonds represent an alternative to the extremely low rate of return on bonds and government securities in Europe and the U.S.

The article examines government securities prices. Yields on U.S. Treasury bonds are at historic lows of less than one percent as investors have sought a safe haven during the financial crisis. Government securities yields have begun to rise in early 2009, however, as the spread between those rates and the returns offered by stock dividends and corporate bonds grew to levels of over 3 percent.

The article examines the market for corporate bonds. The interest rate spreads between corporate bonds and government securities are at record highs, meaning corporate bonds offer high yields at relatively little risk, but investors remain extremely reluctant to buy them. This is a reaction to the financial crisis. In the years preceding the collapse of the housing bubble, bond issuers demanded and got very low interest rates from investors.