What's going on with junk-rated bonds this year?

Spreads on junk-rated bonds have widened some 184 basis points this year while yields - which move inversely to prices - have spiked to over 9%, according to the ICE BofA US High-Yield index (.MERH0A0). That level is the highest for yields since April 2020, while the index is down some 13% this year.

Are junk bonds making a comeback in 2024?

Junk bonds are beating the broader U.S. fixed-income market so far in 2024 — but pummeled Treasurys have attempted a comeback lately. “A slow but unmistakable shift from credit risk to rates risk is underway,” credit strategists at BofA Global Research said in a note Friday.

What is the default rate for junk bonds?

According to S&P Global Ratings, the default rate for junk bonds was 5.5% in 2020. By contrast, the default rate for investment-grade bonds is 0.00%. Lack of liquidity. High-yield bonds sometimes have liquidity issues, meaning it may be difficult to sell them for cash when you need it. Junk bond values can fall if credit ratings are downgraded.