Morgan Stanley says investors should consider this port in the market storm right now

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Where do investors turn in turbulent markets? Investment-grade bonds, says Morgan Stanley.

The great British pound selloff, credited with exacerbating a global rout for markets last week, looks set to continue wreaking some havoc on Monday.

Wall Street has plenty of worries of its own, with many looking for the S&P 500 SPX to revisit June lows sooner or later. And big institutional investors seem unwilling to take any chances, reportedly spending $34.3 billion in the latest four weeks on stock options to protect against a selloff, the biggest on record going back to 2009.

“This means that the vast majority of the issuers of these bonds don’t have to come to the new issue market to borrow at the current higher rates,” he said. What this means is even if yields on new debt are higher than the average of all debt outstanding, maturing bonds have relatively high coupons. So most companies have had to refinance at much higher levels.

The buzz Amazon.com AMZN will hold a second global sales event — Prime Access Early Sale — to lure in holiday shoppers, who are expected to bargain hunt early this year.

 

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Hmmm, the ratings agencies are rating everything investment grade. Better do your own research on this if you are going down this road.

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