Taking this distortion to yet another level, compared to high yield bonds, blue-chip, high quality stocks look incredibly cheap!
FORBES: Stocks And Bonds: Distortions Are Surfacing In The Markets
First is pension liabilities: under the new rules, a company's future obligations will be calculated using the yield on high-quality corporate bonds.
In order of popularity, respondents said they owned high-quality corporate, high-yield, international (including emerging market), Treasury (including TIPS) and municipal bonds and bond funds.
This means that for investors seeking income-oriented opportunities with daily liquidity, a well discriminated, quality high yield portfolio remains one of the most attractive investments across all fixed income markets.
Just take a look at what happened to the SPDR Barclays High Yield bond ETF ( JNK) compared to the high-quality Vanguard Total Bond ETF ( BND) during the heart of the last recession.
Additionally, many mutual funds have been forced to sell their high quality, high yield bonds because of redemptions.
Does this mean that high yield bonds are over-valued? (likely), that Treasury bonds are over-valued, since high yield bonds are priced as a spread above Treasuries? (very likely), and that high quality stocks in a universe of mostly overvalued liquid assets are relatively cheap? (likely).
FORBES: Stocks And Bonds: Distortions Are Surfacing In The Markets
Of course, second-lien debt is a niche product for issuers that require higher leverage than is usually available in the first-lien market, but that in many cases are locked out of the regular-way high-yield bond market because of size, credit quality, or complexity.
U.S. farmers paid more for high quality Genuity reduced refuge corn and Roundup ready 2 yield soybean seeds as global food prices hit historic highs.
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Improvements have been made in image quality with the newer OLED technology, but high manufacturing costs, yield limitations and limited lifetime make it expensive and challenging for all but the smallest devices.
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"There's been a general flight to quality, so very few people want to take a chance on high-yield bonds right now, " said Cecilia L. Gondor, executive vice president of Thomas J.
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