Chart Library

YIELDS
September 2022

What's Behind the Sharp Rise in Yields in 2022?

Since the start of 2022, dynamics within markets have shifted as a result of evolving pressures, including higher and persistent inflation, slowing economic growth, supply-chain disruptions, geopolitical uncertainty, and aggressive central bank policies. This has resulted in a broad risk-off approach by many investors as risk-based and fixed-income asset classes have succumbed to these significant challenges. However, one of the benefits of fixed income is the inverse relationship between price and yield. We have seen many portions of the fixed-income market with yields not seen in over a decade. We believe the current yield environment has set the stage for an attractive opportunity to capture potentially elevated yields if prices continue to climb over the coming months/years.

Download PDF
Yield Changes Since the Beginning of 2022
What's Behind the Sharp Rise in Yields in 2022?
Source:

Bloomberg Credit 1-3 Yr Total Return USD Index, Bloomberg US Credit Index, Bloomberg Corporate High Yield Index, and Credit Suisse Leverage Loan Index as of 9/6/2022.

ii
Filter categories:
Showing
0
results
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Active tag
BANK LOANS
,
September 2022
Historical Correlations Among Major Fixed-Income Asset Classes
View chart

Why Bank Loans May Provide an Avenue For Diversification in a Portfolio

Historically, while correlations for many assets classes have increased, bank loans have still offered the lowest correlation to broad investment-grade bonds of major fixed-income sectors. Even more impressive, as of July 29, 2022, bank loans carried a lower correlation to investment-grade bonds than U.S. large-cap and U.S. small-cap stocks at 0.16 vs. 0.68 for large caps and 0.73 for small caps. Meanwhile, as of July 29, 2022, high-yield bonds were near their record 12-month high correlation to broad investment-grade bonds at 0.75 (0.85 is the all-time high).

Download PDF
ii
CORPORATE BONDS
,
September 2022
Past Performance of Corporate Bonds vs. U.S. Treasury Bonds
View chart

Corporate Bonds' Past Outperformance

Since 1999, when spread levels were greater than 1%, 1-3 year corporate bonds have outperformed Treasury bonds of the same maturities 99% of the time. During that same period, when spreads were greater than 1.5%, that number jumped to 100%. Also since 1999, 5-7 year corporate bonds have shown similar levels of outperformance to their Treasury counterparts when spreads eclipsed 1%. During that same period, when spreads were greater than 1.5%, 5-7 year corporates have never underperformed their Treasury counterparts.

Download PDF
ii
INVESTMENT GRADE
,
HIGH YIELD
,
August 2022
The Past Benefits of Duration in the 12 Months Following a Fed Rate-Hiking Cycle
View chart

Does Duration Matter After a Rate-Hiking Cycle?

Since 1996, whenever the Federal Reserve reached the end of a rate-hiking cycle, longer-duration spread sectors have outperformed their shorter-duration peers in the following 12-months.

Download PDF
ii
INVESTMENT GRADE
,
HIGH YIELD
,
BANK LOANS
,
August 2022
Yield Increases Since the Start of 2022
View chart

Yields Have Risen in 2022 Amid Volatility

Given recent volatility in risk assets, U.S. corporate-debt sectors have seen yields push well past where they started the year. For those investors looking for income, as well as asset classes that have historically done well in past Federal Reserve rate-hiking cycles, corporate debt might be a good option to consider.

Download PDF
BANK LOANS
,
July 2022
Historical Outperformance in Volatile Periods
View chart

Bank Loans: Outperformance in Volatile Periods

For almost three decades, bank loans have performed well during periods of market volatility.

Download PDF
ECONOMY
,
June 2022
Money-Market Fund Flows Through the First 5 Months of Past 11 Years
View chart

Record Money-Market Outflows so far in 2022

Despite current market performance, investors appear to be quite optimistic, pulling more money out of money-market funds in the first five months of 2022 than they have in any year in the past decade. So, where is that money going? Year-to-date, large-cap blend, large-cap value, foreign-large blend, long government, and bank-loan funds have seen $171 billion dollars of inflows (approximately 72% of the outflows of money-market funds). Bank-loans remain a top performer for year-to-date returns.

Download PDF
ii
BANK LOANS
,
HIGH YIELD
,
INVESTMENT GRADE
,
May 2022
Historical 12-Month Returns At Varying Price and Yield Levels
View chart

Is the Time Right for Corporate Debt?

Historically, when investment-grade corporate bonds, high-yield bonds and bank loans have reached the same price and yield levels as today's, they've generated a 12-month return well above each asset class’s 20-year annualized return (7.20% for high-yield bonds; 4.65% for investment-grade corporate bonds; and 4.65% for bank loans).

Download PDF
ii
BANK LOANS
,
May 2022
Yield vs. Risk-Adjusted Yield for High-Yield Bonds and Bank Loans
View chart

The Importance of Risk-Adjusted Yields

Investors searching for yield might do well to consider an investment's risk-adjusted returns, especially with today’s volatility. High-yield bonds and bank loans have historically been two of the top performing asset classes in past Federal Reserve hiking cycles. But even with the 1.29% extra yield offered by high-yield bonds, on a risk-adjusted yield basis, bank loans may offer a more attractive opportunity (4.70% vs.1.34% for high-yield bonds) for those looking to add yield without the volatility that may come with it.

Download PDF
ii
BANK LOANS
,
April 2022
Weathering the storms of 2022
View chart

Bank Loans Have So Far Provided Shelter in 2022

For what has historically been a shelter for investors when volatility has increased, the Bloomberg US Aggregate Bond Index may be facing its worst year return since 1976 and the second year in a row of negative returns. However, bank loans have been one asset class of the fixed-income market that have so far managed to weather the storms of 2022 and generate mostly positive returns for investors year-to-date.

Download PDF
INVESTMENT GRADE
,
April 2022
Stepping into Credit
View chart

Here's an Alternative to Short-Term U.S. Treasuries

As investors try to balance the major headwinds of rising interest rates and global conflict, finding shelter in short-term, investment-grade fixed income may be a consideration, as yields for front-end fixed income have returned to pre-pandemic levels. While some investors may prefer to seek safe harbor in U.S. Treasuries, short-term, investment-grade corporate bonds might be a better alternative.

Download PDF
BANK LOANS
,
March 2022
Annual New-Loan Issuance ($B)
View chart

Fast-Paced Issuance Continuing in Bank Loans

Strong demand and a potential favorable environment have been a couple of carryover tailwinds from 2021 for bank loans. Through Feb. 24, the average new-issue loan deal was $959.1 million vs. $781.8 million from the same period in 2021.

Download PDF
BANK LOANS
,
March 2022
Fed Fund Rate vs. Bank-Loan Coupons Since 1994
View chart

As the Fed Hiked, Bank-Loan Rates Followed

The floating-rate nature of the asset class has helped investors during periods of rising interest rates, as the interest rate on loans typically resets every 30-90 days based on the new rate environment and generally move in tandem with the federal funds rate.

Download PDF
BANK LOANS
,
March 2022
Floating-Rate Default Rate
View chart

Bank-Loan Defaults Plummeted in 2021

Default rates have always been a major factor for investors considering floating-rate loans, which is a primarily non-investment-grade asset class. But with default rates currently tracking well below their historic average of 2.53% (the percentage for January 2022 clocked in at 0.29%), the historical default risk could be significantly reduced in the near term.

Download PDF
BANK LOANS
,
March 2022
Historical Performance During Past Four Rate-Hike Cycles
View chart

Bank Loans Outperformed in Past Rate-Hike Cycles

Floating-rate loans have historically done well generating returns in rate-hike cycles, which typically have been a difficult period for traditional fixed-income asset classes.

Download PDF
ECONOMY
,
February 2022
The Chicago Board Options Exchange's Volatility Index
View chart

'Fear Index' Doesn't Suggest Imminent Bear Market

Markets have been volatile so far in 2022. In just one day in January, the Dow Jones Industrial Average fell and gained over 1,000 points. Although a 1,000-plus daily swing sounds overwhelming, the Chicago Board Options Exchange’s Volatility Index (VIX or, informally, the “Fear Index”) has been much higher in the past.

Download PDF
BANK LOANS
,
February 2022
Institutional New-Issue Loan Volume in 2021
View chart

Record Year for New-Issue Loan Volume

Loan issuance slowed during the last quarter of 2021 to $126.8 billion, but it was more than enough to help 2021 set a record issuance of $615.2 billion. Numerous records were set in 2021 specific to the loan-asset class, including loan and CLO issuance, single-B issuance, and mergers-and-acquisition activity.

Download PDF
🤷 No results found. Please try different keywords.

Subscribe to receive industry news and insights

Welcome

Please choose your role

This site is intended for FINANCIAL ADVISORS ONLY.

This version of the website is specifically intended for financial advisors and other investment professionals and may not be used with or by individual investors. The content and investment strategies may not be suitable and/or available to all investors. By clicking accept and accessing this website, you represent and warrant that you are authorized to conduct investment business in the United States, and that you are authorized under the U.S. federal securities laws and FINRA rules to receive material relating to investments, securities markets and research made available only to institutional investors. You further represent and warrant that you will utilize such materials only for their stated purpose.

CANCEL
ACCEPT

This site is intended for REGISTERED INVESTMENT ADVISORS AND INSTITUTIONAL INVESTORS ONLY.

This version of the website is specially intended for Institutional Investors only. Institutional Investors include registered investment advisors, defined contribution and defined benefits plans, foundations, endowments, consultants, insurers and trust administrators/ custodians. The content and investment strategies may not be suitable and/or available to all investors. By clicking accept and accessing this website, you represent and warrant that you are authorized under the U.S. federal securities laws and FINRA rules to receive material relating to investments, securities markets and research made available only to institutional investors. You further represent and warrant that you will utilize such materials only for their stated purpose.

CANCEL
ACCEPT
Copyright 2022 © Pacific Life Insurance Company
Please Upgrade Your Browser.

Unfortunately, Internet Explorer is an outdated browser and we do not support it. To have the best browsing experience, please upgrade to Google Chrome, Firefox or Safari.

Upgrade