Nowhere to Hide in Worst Bond Losses Since 2008: Credit Markets

[Purveyor]

By Victoria Stilwell - Jul 1, 2013

Investors are finding no shelter from the worst corporate-bond losses in almost five years as debt plunges for the most creditworthy to the riskiest borrowers in every industry worldwide.

Company debentures erased 2.2 percent the last three months, the worst quarterly decline since a 5.2 percent plunge in the period ended September 2008, when the collapse of Lehman Brothers Holdings Inc. ignited the worst credit crisis since the Great Depression, Bank of America Merrill Lynch index data show. All 16 industries in the index lost during the period, from a 0.7 percent decline for the debt of automakers to a 3.5 percent drop in energy-company bonds.

Speculation that Federal Reserve Chairman Ben S. Bernanke may soon lead a pullback from unprecedented stimulus efforts fueled a 1 percentage point jump in 10-year Treasury yields the past two months. That sparked withdrawals from bond funds and a slowdown in corporate debt issuance from a record pace. Royal Bank of Scotland Group Plc strategists in the U.S. lowered their predictions for 2013 gains last week.

“There has been no safe haven,” said Jeroen van den Broek, head of credit strategy for ING Bank NV in Amsterdam, who recommends investors buy credit, with a preference for investment-grade debt. “We’re seeing a complete focus on rates and everything surrounding Bernanke.”

Junk Deflated

Even junk-rated bonds, typically considered a buffer against rising interest rates because they offer larger relative yields over Treasuries, lost 1.5 percent in the second quarter, compared with a 2.4 percent decline for investment-grade notes.

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http://www.bloomberg.com/news/2013-07-01/nowhere-to-hide-in-worst-bond-losses-since-2008-credit-markets.html

[Jessy169]

1. Can someone read the tea leaves for me?

What does it all mean? Is it time to "go prepper"???

[dixiegrrrrl]

4. Means Bernanke's tricks are no longer working

and in order to get people to buy bonds ( which are debt) you have offer higher interest rates to make the purchase more valuable.
Which means you have to PAY more money to people at some point.
Which is really really tuff when you have not had enough money to pay for a long time, and now have even less for increased payments.
So yeah, in the end, interest rates rise.
Mortgage rates rise, people stop or slow down buying houses, cars, investments.
The economy tanks, slowly at first, but if nothing changes, the tanking speeds up.
This was all predicted, the timing was not as easy to predict, but keep an eye on the global market as well.
Things are coming to a head, they HAD to, sooner or later.

[Junkdrawer]

6. Keep an eye on the inflated stock markets....

Low bond interest rates have been artificially inflating the stock market for decades....

[dixiegrrrrl]

5. Mortgage applications slide 11.7% as rates rise

headline from this am.
houses and cars just got more expensive.

[byeya]

2. Junk bonds behave more like stocks because their main risk is default and there's a smaller

than usual chance of that with interest rates low. But they are rising so junk is taking it's lumps too. This is what the end of a thirty year bond bull market looks like.
Look for a reversal if the economic data turns negative; look for more of the same if the economy continues a slow or better growth pattern.

[Egalitarian Thug]

3. ..