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How the Bond Markets React High yield bond investors, or those that prefer the excitement of junk bond investing are finding less and less to get them excited. As the equities markets continue to move forward, the quality of the risk has lessened to the point where a good debt bet might net as little as eight cents on the dollar. It wasn't that long ago that these securities paid for the risk with substantial rewards of 53 cents to the dollar plus.
This sort of debt snobbery is to be expected as many companies try to return to profitablity through the restructuring of their debt. Investors may not want to bit as hard as in the past finding the risk is not worth the return.
Last week, Ben Bernanke, the Federal Reserve governor caused a small rally in Treasuries with his remarks concerning inflation. His comments stating that inflation was under "very good control" coupled with the Fed Chairman's outlook that despite vigorous growth in the economy, jobs may still be lagging behind.
This Friday, February's job numbers will be published and the belief that the economy will add another 100,000 jobs, at least, would make that event the first time since 2000 that to consequtive months that has happened. This will take the wind out of the sales of Treasuries.
Keep in mind, that these forecasts have come up short in each of the last three months. Any suggestion that jobs are improving will surely force the Feds hand with interest rates.
Schedule of Federal Reserve Board's Speakers
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