And it is for this reason that the stock market has not had an equally violent reaction to the 45% increase in the yield on the 10-year T-Note.
We are not in that moment yet, but as one market participant pointed out: today's 60bp rise in the yield of Italian bonds is a "big move in a massive market".
June treasury note futures nevertheless reversed gains to a session high point at 122-25 to trade at a minor loss on the day trimming a fall in the yield to a minor rise to 3.18%.
Stress tests of the largest 17 commercial banks showed that most of the banks seem resilient to isolated shocks, including a sharp reduction in real estate and other asset values, shifts in the yield curve, and changes in the exchange rate.
As ever, a drop in the yield on German bonds, the fall in the implicit interest rate it would have to pay, is not a sign that investors are any more hopeful that a solution to the eurozone's stresses are anywhere in sight.
The PowerShares DB G10 Currency Harvest Fund ( DBV) which takes long positions in the three G10 currencies with the highest yield and short positions in those with the lowest yield.
The higher yield in the underlying assets of funds like EBND are of no help, because EBND is down 1.5% so far in September while the zero yield of the iShares 3-7y US Treasury Bond (IEI) fund is up 0.35% thanks to higher bond prices.
Indeed, some weakness in the high-yield market in the second half of March was linked to rising Treasury yields as bond prices declined.
FORBES: High-yield bonds pull back ahead of earnings season despite huge ETF inflow
Unsurprisingly, upward spikes in the dividend yield came in bad economic times.
When it comes to access to food, global warming is expected to be responsible for a 7% yield decrease in the developing world and a 3% yield increase in the developed world over this century.
So the real question for investors is: Is it too late to get in on the yield party?
Penniman also acknowledges that defaults are always a concern in the high yield markets.
For those willing to take more risk and dabble in the high yield segment there are an array of choices.
If it lowers the cost of borrowing for everybody, the fall in the gilt yield will operate much like an extra burst of quantitative easing (QE).
Since the beginning of the second quarter, U.S. Treasury bond funds have been money makers despite the fact that the underlying securities in the fund yield under 3% annually.
FORBES: US Treasury Bond Funds Still Outperformers, But For How Long?
Given the greater liquidity in the high yield market, some arrangers are a lot more comfortable underwriting senior secured bridge loans to high yield and then flexing and structuring the capital structure based on market demand.
FORBES: May 2012, European Leveraged Loan Market Trends and Analysis
In Britain the rental yield on arable land fell from 3.4% in the second half of 2003 to 1.75% in the first half of 2011, according to the Royal Institution of Chartered Surveyors.
ECONOMIST: Why Kansas and Somerset farmers should toast the Chinese
In contrast, the yield on German 10-year bonds, considered the safest in the eurozone, fell to 1.45% from 1.55%, meaning that the gap or "spread" in borrowing costs between the two countries rose half a percentage point to 3.44%.
The same Capsugel deal today, Kravis said, would have a cost of capital near 9%, a reflection of the late-summer weakness in equity markets and window closing in the high-yield market, which moves on a hair trigger in turbulent times.
At one time analysts liked to do this by quoting the yield gap (though this became inverted when dividend yields fell below bond yields in the 1950s) or the yield ratio, both of which relate share to bond yields.
ECONOMIST: A survey of global equity markets: Valuation waltz | The
Financing is cheap on loans used to finance leverage buyouts: The average yield in the junk-bond market is at its lowest level since October 2007, falling to 8.7%.
However, if rates do indeed hold near record-low levels, investors in search of yield in the fixed-income market might benefit from taking a look at nontraditional credits as Holtz suggests.
In the high-yield bit of the market, American bonds returned -5.2% in the third quarter and European bonds -10%.
However, with the global economic environment slightly improving in 2009, the yield on trading assets for FICC increased to 4.3%.
GM's uncapped weight in the high-yield indices (6.4% in America and 20.3% in Europe).
Chart Analysis : The weekly chart of the ten-year T-Note yield ( TNX) shows the high in yield at over 5% in early July 2007.
The 10-year Treasury note must have thought it was already in Tokyo: the yield dropped to an unbelievable 1.45%.
FORBES: Student Loan Bubble Sets Up To Be Subprime Disaster Part Deux
As a callow bond-trader, fresh out of college, he participated in one of the greatest of them all, in Japan in 1986, when the yield on the ten-year benchmark Japanese government bond fell to 2.5%, the discount rate at the time.
The pullback in utilities corresponded with the yield on the ten-year Treasury note breaking above 4.4%.
应用推荐