The chase for yield hit full throttle yesterday as investors continue to pile into corporate bonds – both HYG (iShares' high yield corporate bond ETF) and LQD (iShares' investment grade corporate bond ETF) hit new all-time highs (dividend adjusted):
Other yield sensitive sectors such as REITs (IYR) and mortgage REITs (NLY) also continue to perform exceptionally well in a sign that investors are willing to drive share prices to new multi-year highs on an almost daily basis as they reach for juicy dividend yields. Portfolio manager David Schawel has the following to say about the current state of the MBS market and shrinking spreads:
“Tons of demand from banks, REITS, money managers & others both front running the Fed & those wanting to express a view of short vol.”
Pardon my skepticism but something about this chase for yield has me repeating the Warren Buffett axiom “be fearful when others are greedy” over and over again in my head.
Disclosure: Robert Sinn is a professional trader and market analyst who focuses on multiple asset classes including equities, futures, options and currencies. Robert also has a niche expertise in the precious metals mining/junior mining sectors. He integrates fundamental and technical analysis.
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The Chase For Yield Is On
Published 07/19/2012, 05:08 AM
Updated 07/09/2023, 06:31 AM
The Chase For Yield Is On
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