Economically, our mantra all year has been that we're in a slow-growth environment. That hasn't changed.
-Ken Taubes, chief investment officer, Pioneer
Despite a steady stream of negative headlines and high volatility, markets are holding up pretty well. The broadest measure of the stock market, the S&P 500 Index, is up nearly 13% year-todate through today, August 13, 2012. The NASDAQ is up almost 17%. High yield bonds are up almost 9.7% while investment grade corporate bonds have gained over 7%. Even Europe has managed 7.5%, as measured by the FTSE Eurofirst 300 Index in dollar terms.
Especially interesting are corporate bonds. They're basically at their lows for the year in terms of both yields and spreads. In fact, after starting the year at around 725 basis points over Treasuries, high yield bond spreads are about 600 basis points over Treasuries today. Investment grade spreads started the year at about 257 basis points over Treasuries, and now are around 190. Investment grade bond yields are around 3%, High Yield bonds around 7%.