Last week, I said the high yield market was hot. Today I am saying the entire credit market is quite possible insane. Toro's Running of the Bulls has been one of my favorite investing blogs for a long time. He recently penned an incredible piece entitled: The Bond Market Has Lost It's Mind. As you can tell, I am less than original in the title of my post. That being said, I would like to provide some "on the ground" intelligence if you will of what I am talking about.
Investors are putting cash into junk-bond mutual funds as money market funds from companies such as Federated Investors Inc. and JPMorgan Chase & Co. offer yields at or below 0.25 percent, according to data compiled by Bloomberg."The average retail customer can’t live on 1 percent and that’s the issue,” said Jon Budish, senior vice president of high yield at Jefferies & Co. in Short Hills, New Jersey. “Until the default rate changes or you get a lot of downgrades, or until the Fed says something different, high-yield seems pretty interesting.”