Market Extra: ‘You can be invested in fixed-income again,’ bond investors say, even before the Fed stops hiking rates

by | Oct 19, 2022 | Stock Market

Sharp days of volatility, like the ones lately rocking markets, can create big winners and losers on Wall Street. But the year’s wild swings also have dramatically repriced financial assets, pushed yields higher on corporate bonds and created more cover for a swath of investors if earnings fizzle or a recession hits.

“Fixed-income is back in vogue,” said Michael Kirkpatrick, senior portfolio manager at Seix Investment Advisors, in an interview with MarketWatch. “You can be invested in fixed-income again.” Investors have been reeling from a historically bad stretch for bonds, but also the misery of the S&P 500’s
roughly 22.5% decline on the year through Wednesday. Lately, however, debt issued by many companies in the index has begun to offer some of the highest sustained yields on record, outside of prior U.S. recessions. “You really have to go back before the financial crisis to get yields in this neighborhood,” said Matt Daly, head of corporate and municipal teams at Conning, about investment-grade corporate bonds. Yields at 6%-9% It’s hard to talk about financial markets this year without pointing to the key role that volatility in the benchmark 10-year Treasury
rate has played in the tumult. Yields in the rest of the bond market also have increased, creating a big blow to bond returns and a sticker shock to households and companies looking to obtain financing. That could be a good signal for the F …

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