Two Years of Pain in the Bond Market

  • 70% of U.S. corporate bonds still trade at a discount
  • Discounts stem from a deluge of low-coupon corporate bonds issued in the past decade
  • Investors hesitant to buy discounted bonds due to lingering pain from the ‘greatest bond bear market’
  • Uncertainty about future path of yields and Treasury issuance impacting investor decisions

The U.S. corporate bond market is still feeling the effects of the Federal Reserve’s rate hikes, with 70% of outstanding bonds trading at a discount. This is due to a surge in low-coupon bonds issued by companies during a borrowing spree in recent years. Investors are hesitant to buy these discounted bonds as they remember the ‘greatest bond bear market’ and face uncertainty about future yield paths and Treasury issuance. High-yield junk bonds have seen spreads shrink, but investors remain focused on new supply with higher coupons.

Factuality Level: 7
Factuality Justification: The article provides accurate and objective information about the current state of the U.S. corporate bond market and its challenges due to the Federal Reserve’s rate hikes. It discusses the impact on older bonds with low coupons and investors’ hesitance to buy discounted bonds. However, it could benefit from more context and background information on the Fed’s policy decisions and their potential future actions.
Noise Level: 6
Noise Justification: The article provides some relevant information about the current state of the corporate bond market and its challenges due to the Federal Reserve’s rate hikes, but it lacks in-depth analysis and fails to explore potential long-term trends or consequences. It also contains some filler content with advertisements and promotional language.
Private Companies: BondCliQ,Apple,Disney,Microsoft
Key People: Bryon Anderson (head of fixed income at Laffer Tengler Investments)

Financial Relevance: Yes
Financial Markets Impacted: U.S. corporate bond market, Federal Reserve’s interest rate hikes, Treasury bonds, investment-grade and junk bonds
Financial Rating Justification: The article discusses the impact of the Federal Reserve’s interest rate hikes on the U.S. corporate bond market, the discounted prices of corporate bonds, and how it affects investors’ decisions in purchasing bonds. It also mentions the potential future path of yields and the relationship between Treasury bonds and investment-grade/junk bonds.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.

Reported publicly: www.marketwatch.com