Public Service Enterprise Group

High-Grade, Corporate-Bond Yields Notch Another Record Low

Corporate-bond yields are again at levels never seen before.

Driven by Friday's rally for the safety of Treasurys after weaker-than-expected U.S. April nonfarm payrolls, the yield on the Barclays U.S. Investment-Grade Index fell 0.03 percentage point to 3.25%, setting a fresh record low for the index, which dates to 1973.Safety-oriented investors seeking higher yields than Treasurys offer have been driving into corporate bonds all year, pushing yields down from the 3.80% average yield on Jan. 1.According to Lipper, a Thomson Reuters unit, mutual-bond funds and exchange-traded funds received $46.9 billion of net inflows in the first four months of this year. In the latest week alone, funds absorbed $1.235 billion of new cash, the third-largest intake ever.So far, investors have been rewarded. High-rated corporate bonds have delivered a total return of 3.97% for 2012, including a 0.45% return in May. Total return includes coupon payments as well as capital appreciation.But with yields so ...

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