Junk Bonds are testing a 7 month old downward trendline!
If you’re chasing portfolio income, you may be eyeing high-yield bonds, also known as junk bonds, which typically pay more interest but carry greater risk.
Since interest rates and bond prices move in opposite directions, U.S. junk bond values have dipped to the lowest levels since May 2020. But yields are at 7.5% as of May 17, up from 4.42% since the beginning of January, according to the ICE Bank of America U.S. High-Yield Index.
However, high-yield bonds have greater default risk than their investment-grade counterparts, meaning issuers may be less likely to cover interest payments and loans by the maturity date.
Since interest rates and bond prices move in opposite directions, U.S. junk bond values have dipped to the lowest levels since May 2020. But yields are at 7.5% as of May 17, up from 4.42% since the beginning of January, according to the ICE Bank of America U.S. High-Yield Index.
However, high-yield bonds have greater default risk than their investment-grade counterparts, meaning issuers may be less likely to cover interest payments and loans by the maturity date.