Global capital markets had a marvelous trading day to close out the week on Friday. Almost everything traded strongly higher to close out the week including widely divergent categories such as U.S. stocks, U.S. Treasuries, gold and copper all posting robust gains. But one asset class was conspicuously absent from the party on Friday. It was high yield bonds, and the fact that this category could not even squeeze out an incremental gain with the rest of the market surging raises an eyebrow to say the least. Given that so many income-starved investors such as retirees have found themselves increasingly allocating to this category in recent years in the desperate search for yield, it is worthwhile to take a look under the hood and consider exactly what investors are getting when they are buying into high yield bond market.
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