This chart caught my eye this morning. Investors are increasingly worrying about investment grade (IG) corporate bonds. And they should. Most IG bonds carry the lowest IG credit rating; and they are overweighted in the energy sector. When bottom-rung IG bonds are hit with a ratings cut, (becoming fallen Angels) mutual funds with minimum IG requirements in their prospectuses become forced sellers.
This is not a good time to reach for yield by owning lower credit quality bonds. I would much prefer to protect my capital and earn 1% on Treasuries than risk my capital.
JR
