The greatest rally ever in junk bonds

Discussion in 'Trading' started by 007Arb, Jan 6, 2009.

  1. 007Arb


    I have been trading junk bonds since January 1991 and am absolutely floored how they have performed since the Fed meeting in December. It's been the greatest three week junk bond rally ever and the past two days have been the best two day rally ever. I am referring to the cash market and the open end junk bond funds here. As for the closed end junk bond funds most have lifted over 50% since mid December and the three junk bond ETFs have also risen strongly. All this in addition to dividend yields of anywhere from 9% to over 20% annually (depending on whether they are open or closed end ) which are paid out on a monthly basis.

    I realize September through November was the worst stretch ever for junk bonds but this move back seems to be more than just an oversold snapback. Time will tell I guess. If it proves to be something move than a snapback it will have extremely positive implications for the stock market in general. In fact, I can't think of anything better to explain the most recent stock market rally in stocks than this narrowing in credit spreads.
    Chuck Krug likes this.
  2. how long do you think it'll last? many high yield guys are coming out of the woodwork these days. would be nice if the rally stuck around for a while.