- The US high yield market has seen a strong comeback since its panic-driven downturn at the onset of the COVID-19 pandemic. But as today’s economic recovery gathers steam, a new fear has seized investors: rising bond yields.
- Bonds are sensitive to interest-rate movements, and investors can initially suffer negative returns when yields rise. But if your investment horizon is longer than a few months, short-term losses probably don’t matter that much.
- Whether investors should root for yields to rise also depends on the size of the yield increase. The larger the yield increase, the bigger the price drop.
For further details see:
Why Investors Shouldn't Take A Time-Out From High Yield