EverettGriz said:
Yes. And I think you just proved my point, not yours. Bond markets perform well in down markets. They perform poorly during inflationary times.
Uhh, the Fed's ZIRP is pushing capital to bonds because it has a higher return. The Fed manipulates where money goes simply by flipping a switch.
It's not just the fact that they are bonds, but that they are sub prime bonds, much like the sub prime mortgages. Yellen wants to raise rates to discourage capital investment into those bonds. After she does, this week, the dollar will strengthen, causing several businesses to go bankrupt and the job losses will be substantial. These companies should NEVER have been able to acquire funding through bond issuance or loans. They simply weren't credit worthy.
There is a mad dash to exit these bond funds so the funds are having to liquidate bonds at fire sale prices, driving the prices even lower. On Friday, the second major high yield bond fund ceased distribution to arrange an orderly liquidation of assets. Investors (mostly retirees and near retirees) will get pennies on the dollar.