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Junk-Bond Paranoia Gives Way to Relief in October Bargain Hunt

  • Safest high-yield securities lead rally to erase yearly loss
  • `A number of reasons not to' jump in, Bank of America warns

Feeble global growth, a fidgety Federal Reserve and a tepid earnings outlook have given junk-debt investors a lot of reasons for pause in recent months. But when a bargain shows up, you just can’t hold some of them back.

An index of high-yield bonds is on track for its best month in three years, erasing a September meltdown and leaving the gauge poised to eke out a gain for the year, Bank of America Merrill Lynch data show. It would also reverse a run of four straight monthly declines that fueled concern of mounting instability in global capital markets.