Exchange-traded funds that track bonds from across the credit spectrum surged higher after the Federal Reserve announced plans to buy more debt, including taking the unprecedented step of buying some ETFs with bonds that have ratings below investment grade. The iShares iBoxx Investment-Grade Bond ETF /zigman2/quotes/206919681/composite LQD +0.65% rose nearly 3% mid-morning, while the iShares iBoxx $ High-yield Corporate Bond ETF /zigman2/quotes/204471305/composite HYG +0.40% rocketed nearly 7% higher. The difference in the Thursday morning moves underscore the pressure high-yield, or junk, bonds have been under through the past few months of market volatility: HYG is down nearly 6% in the year to date, while LQD, which includes much safer bonds, is up 1.3%.
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Fed’s souped-up lending programs extends aid to ‘junk’ bonds