Monitoring the Bond Market

Source: Capital Pixel

Mention the word "bubble" today and most investment market observers will immediately bring up the bond market.  Bond yields are at historical lows, and Central Banks are printing money at a rapid clip.  Most observers agree that rates are headed higher and that the average investor, who has enjoyed double digit returns as yields have dropped, doesn't really understand the impact of rising rates and falling bond prices.

Bloomberg offers a neat, easy way to monitor bond market performance on an ongoing basis.  Go to the corporate bond link at the Bloomberg site.  There, on the left hand side, you'll find:

Source: Bloomberg

CLICK IMAGE TO ENLARGE Here we have total return performance for both the investment grade and high yield (i.e. junk) bond markets.  As shown, investment grade bonds have produced a negative total return year-to-date of -.63% and the high yield bond sector has returned a positive +.88%.

For those interested in what is being measured, the site defines the indexes as follows:

The FlNRA/Bloomberg Active U.S. Corporate Bond Indexes are comprised of the "active" (most frequently traded) fixed coupon bonds represented by FINRA TRACE. FINRA's transaction reporting facility that disseminates all over-the-counter secondary market transactions in these public bonds. Indexes are updated after 5:30PM ET each business day. The indexes are rebalanced on a monthly basis.

Further down the page at the site are statistics on number of bonds tracked, etc.


Hopefully this Bloomberg table will help some investors avoid statement shock in the event that yields do rise sharply.