The high yield sectors performed differently. MLPs rose but have flattened out in the 190-200 trading range they got accustomed to early in the year. While they are up on the year, there is a sense of being stuck in the mud (i.e. this zone). The next weeks will be critical as earnings & distributions for Q2 will be announced. I think the markets are nervous concerning MLPs, fearing they may report getting pinched by the economic slowdown.
REITs also had a fairly flat performance, but that was followed by a nice rise last week. Annual reports are coming out & investors may be encouraged by their messages. They are plugging away in this terrible economy (not much else to do) & hopefully will be able to work with banks & lending institutions to pull thru. Very high yields (astronomical yields in come cases) are attracting aggressive buyers.
Barclays High Yield Index also had a nice gain last month. Being just an index, it understates increases recorded at many junk bond funds. They deserve another mention. In the last 6 months they have been thru one of the worst periods in their existence, taking yields to 20+% or 1700+ basis points above the Treasury bond yield. For those who held these funds & reinvested divs, shares alone are up 10+% which helps limit damage done by plunging bond fund prices. They may be facing stormy seas ahead with div cuts, but so far divs (from net interest) have been fairly steady.
Dow Jones Industrials --- 1 month
Alerian MLP Index --- 1 month
Dow Jones REIT Index --- 1 month
Barclays Cap High Yld ETF - 1 month
Dow is sitting at 8K, which has first served as a floor for several months & then as a ceiling for the last 2 months. This week, stocks will decide how to treat this line of demarcation.
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