Tags: move | risky | bonds | safe

Key Bond Index Indicates Move toward Greater Risk

By    |   Sunday, 14 April 2013 01:20 PM

The Barclays U.S. Aggregate Bond Index (called the Agg) is slipping, as investors exit the safer bonds that make up a large part of it, opting instead for riskier, higher-yielding bonds.

The index slipped 0.12 percent in the first quarter, its first loss for that period in seven years, The Wall Street Journal reports. Investor demand is slumping for the Treasurys and mortgage-backed securities that make up a large part of the Agg.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

Investors have migrated to higher-octane offerings, such as junk bonds and loans, the Journal reports. Inflows to non-traditional bond funds rose to $75.12 billion as of February, according to Morningstar.

Investors see a good chance for rising rates as the economy recovers and the Fed cuts back on its quantitative easing.

While a rate increase would hurt junk bond prices in addition to Treasurys and conservative mortgage-backed securities, investors would be compensated with the higher interest rates of junk offerings.

"Simply going out and buying a U.S. Treasury is becoming a much more dangerous activity than it used to be," Russ Koesterich, chief investment strategist at BlackRock, tells The Journal.

"You either take more risk, or you accept dramatically less return."

As for Treasurys, the 10-year yield dropped Friday to 1.72 percent, Bloomberg reported, as weak retail sales in March encouraged large speculators to raise their net-long positions, and other data adding to speculation the Federal Reserve won’t end its monetary stimulus anytime soon.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
InvestingAnalysis
The Barclays U.S. Aggregate Bond Index (called the Agg) is slipping, as investors exit the safer bonds that make up a large part of it, opting instead for riskier, higher-yielding bonds.
move,risky,bonds,safe
255
2013-20-14
Sunday, 14 April 2013 01:20 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved