I thought that the recent increase in treasury yields would have punished junk bonds quite a bit...if an ultra safe note goes from 4.75 to 5.25 then why would you still be willing to take on the extra credit risk of junk for an even smaller spread over Ts? Yet when I compare how the price of VWEHX (vanguard high-yield) has changed over the last three months compared to VBMFX (Vanguard overall bond market) there is not a whole lot of difference and it even appears that the junk fund held up better than the overal bond index.
All I hear is that junk is overpriced and that spreads over like term T's are at all time lows but even with the recent volatility in the bond market this doesn't seem to be correcting itself. What gives? Is junk going to have to start defaulting before anything will change?
All I hear is that junk is overpriced and that spreads over like term T's are at all time lows but even with the recent volatility in the bond market this doesn't seem to be correcting itself. What gives? Is junk going to have to start defaulting before anything will change?
