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High Yield Stays in Positive Territory as Bond Markets Dip

Rising rates have pushed bond indexes into the red this year, but high-yield bonds, helped by tightening credit spreads in energy, have bucked the trend.

Rising interest rates have pushed fixed income indices into negative territory year to date. The longer end of the curve has risen the most, as the 5-year U.S. Treasury has only risen 14 basis points to 1.79%; whereas, the 10-year has risen 31 basis points, and the 30-year Treasury has risen 46 basis points with those two bonds currently yielding about 2.5% and 3.2%, respectively.

As you would expect with their higher duration, long-term bonds have been the worst performers this year. Our Long Term Government Bond Index has dropped almost 4%; whereas, our Short Term Government Bond Index has increased 36 basis points.