Our latest market commentary - high yield bonds - February 2016

Equity markets have endured their toughest start to a calendar year since 2008, with the FTSE World Index finishing the month of January down 5.5% and continuing to trade lower at the start of February. Falling oil prices, further worries about China’s economic slowdown, softer corporate earnings and weakening commodity markets have all been cited as factors contributing to the sell-off. Even the safe haven status of UK and US government bonds was challenged in 2015 as these assets suffered a technical bear market.   However, whilst government bonds have rallied in 2016 in a “flight to quality”, other elements of the fixed income market have continued to suffer, most notably the high yield (junk) bond sector.