An Opportunity in High-Yield Debt

Market participants have sold high-yield debt in tandem with the equities market in an attempt to take off risk and retreat to safe havens. The equity markets reached a deeply oversold condition last week in what appears to be a corrective pullback within a cyclical uptrend. We expect to see a rebound in equities, and given its correlation, the high-yield debt market could present a good opportunity for cautious bulls looking to shuffle away from low-yielding government bonds and toward equities.

Despite the weak economic recovery and ongoing European crisis, domestic corporations have managed to increase productivity and remain profitable, suggesting that dividends will be paid, which should make the more speculative end of the risk spectrum in bonds a bit more attractive....279 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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