There are no bad bonds, only bad prices. So Dan Fuss, Loomis Sayles’ vice chairman, has often observed—a lesson gleaned from more than six decades of experience managing corporate bond portfolios. After what seems likely to go into the books as the worst first half of the year for fixed-income markets on record, prices now look a lot better from the standpoint of investors aiming to buy low.
The savvy ones that sold high were major corporations that issued bonds at record-low yields in the past two years. Bond prices move inversely to their yields. So, with benchmark 10-year Treasury yields roughly doubling since the start of the year, to over 3%, and corporate-credit yield spreads increasing over risk-free government securities, corporate bond prices have fallen sharply.