Yields have been all over the place for the last several months, with the direction at one point looking inevitably higher, but then things falling lower to the point where it seems a bond bull market may return. Despite this the overall improvement in outlook, a new study has found that corporate bond investors are very nervous about the asset class being overvalued. In fact, a record number of investors are fretting over the prospect of interest rate hikes and how they could send corporate bonds downward. 84% of bond investors surveyed thought the asset class was overvalued.
FINSUM : This seems a logical fear given the overall pricing of corporate bonds. This is especially true for junk bonds, in our opinion, as yields are so low relative to default rates that you barely get anything above Treasuries in “real yield”.