{"id":1262,"date":"2017-07-03T17:52:23","date_gmt":"2017-07-03T17:52:23","guid":{"rendered":"http:\/\/investspectrum.com\/uma\/?p=1262"},"modified":"2019-02-27T21:48:17","modified_gmt":"2019-02-27T21:48:17","slug":"high-yield-returns-when-yield-spreads-are-low","status":"publish","type":"post","link":"https:\/\/investspectrum.com\/uma\/high-yield-returns-when-yield-spreads-are-low\/","title":{"rendered":"High Yield Returns When Yield Spreads Are Low"},"content":{"rendered":"<p style=\"text-align: justify;\">This blog is taken from our January 2017 newsletter discussing yield spreads.<\/p>\n<h4 style=\"text-align: justify;\">High Yield Returns<\/h4>\n<p style=\"text-align: justify;\">The yield differential between high yield bonds and US government bonds is currently only about 3.8%. This indicates that the yield on high yield bonds is paying 6.3%, where 10\u001eyear government bonds only yield 2.5%.<\/p>\n<blockquote><p>A normal range for this yield spread is between 3% and 7%.\u00a0 The lower this number is, the lower the <i>potential <\/i>returns are.<\/p><\/blockquote>\n<p style=\"text-align: justify;\">Looking at what happened in 2004, when we were midway in an economic expansion and the yield spreads were about where they are today, these charts illustrate the returns for the three years following this similar economic period. Total returns for the next few years averaged about 8.5% annually for high yield bonds. If the yield spread continues to drop, high yield bonds should continue to appreciate, but if this spread drops below 3%, a defensive strategy is likely.\u00a0 Currently the yield spread is 3.33%<\/p>\n<p style=\"text-align: justify;\"><a href=\"http:\/\/investspectrum.com\/uma\/wp-content\/uploads\/YieldSpreadsareLow.png\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1263 size-full\" src=\"http:\/\/investspectrum.com\/uma\/wp-content\/uploads\/YieldSpreadsareLow.png\" alt=\"\" width=\"706\" height=\"543\" srcset=\"https:\/\/investspectrum.com\/uma\/wp-content\/uploads\/YieldSpreadsareLow.png 706w, https:\/\/investspectrum.com\/uma\/wp-content\/uploads\/YieldSpreadsareLow-300x231.png 300w\" sizes=\"(max-width: 706px) 100vw, 706px\" \/><\/a>*The CSFB High Yield Index is designed to mirror the investible universe of the $US-denominated high yield debt market.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This blog is taken from our January 2017 newsletter discussing yield spreads. High Yield Returns The yield differential between high yield bonds and US government bonds is currently only about 3.8%. This indicates that the yield on high yield bonds is paying 6.3%, where 10\u001eyear government bonds only yield 2.5%. A normal range for this [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[9,63,62],"class_list":["post-1262","post","type-post","status-publish","format-standard","hentry","category-market-research","tag-high-yield-bonds","tag-high-yield-spreads","tag-yield-spreads"],"_links":{"self":[{"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/posts\/1262"}],"collection":[{"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/comments?post=1262"}],"version-history":[{"count":3,"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/posts\/1262\/revisions"}],"predecessor-version":[{"id":1266,"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/posts\/1262\/revisions\/1266"}],"wp:attachment":[{"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/media?parent=1262"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/categories?post=1262"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/investspectrum.com\/uma\/wp-json\/wp\/v2\/tags?post=1262"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}