While the Equity Markets Gyrate, the Corporate Bond Market Remains a Relative Sea of Calm
This article was originally published on ETFTrends.com.
By Frank Holmes via Iris.xyz
The price action in most financial markets so far this month has been dizzying. This may be best characterized by the CBOE’s well know (and recently well publicized) VIX index, which is a gauge for equity market volatility.
However, as is typical for our market, high quality bonds have behaved much calmer in recent days. And while longer-term interest have risen, which dinged prices for long bonds, most tenors and sectors within the investment grade space have produced flat returns so far this month.
One area of our universe that could see some impact from equity price volatility is corporates, as credit spreads tend to trade with some correlation to equity prices. This has been a good quarter and year for corporate profits, and it appears we’ll be in the money for a while longer. It is hard to imagine a deep sell-off when the economy is growing and corporate profits are so strong.
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