Junk Bonds Are Tanking and Icahn Says Meltdown `Just Beginning'

A day after a prominent Wall Street firm shocked investors by freezing withdrawals from a credit mutual fund, things only got nastier in the junk-bond market. Prices on the high-risk securities sank to levels not seen in six years and, to add to the growing sense of alarm, billionaire investor Carl Icahn said the selloff is only starting.
“The meltdown in High Yield is just beginning," Icahn, who’s been betting against the high-yield market, wrote on his verified Twitter account Friday.
Icahn’s comments come as junk-bond investors, already stung by the worst losses since 2008, are the most nervous they’ve been in three years after Third Avenue Management took the rare step of freezing withdrawals from a $788 million credit mutual fund.

The risk premium on the Markit CDX North American High Yield Index, a credit-default swaps benchmark tied to the debt of 100 speculative-grade companies, rose 36 basis points to 514.52 basis points, the highest since December 2012. BlackRock’s iShares iBoxx High Yield Corporate Bond ETF, the largest fund of its kind, fell to the lowest levels since 2009.

Full article at:
http://www.bloomberg.com/news/articles/2015-12-11/junk-bond-fear-gauge-nears-3-year-high-after-third-avenue-freeze

Today is a land mark date! FED finally becomes half-sane!! Fed stops bond buying :)

The Federal Open Market Committee’s bond-buying program will end this week, members announced Wednesday at the end of a two-day meeting, citing “substantial improvement” in the labor market outlook and underlying strength in the broader economy.

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But FOMC members said keeping the federal funds rate low, in the zero to 0.25% target range, “remains appropriate,” unless incoming information indicates “faster-than-expected progress” toward employment and inflation objectives, the members said in a statement. Narayana Kocherlakota, Federal Reserve Bank of Minneapolis president and CEO, was the lone dissenter, arguing to continue the monthly asset purchase program and to keep the current federal funds rate low until the inflation outlook returns to 2%.

While the members’ position reflected little change since their September meeting, “the market had a change of heart” about when rates will begin rising, said Zach Pandl, senior interest rate strategist with Columbia Management. “You are having a large re-pricing at the front end of the yield curve. Today’s FOMC meeting reaffirms that the committee is on pace to raise rates sometime in the middle of 2015, and the main reason is their confidence in the labor market.”

Full article at

http://www.pionline.com/article/20141029/ONLINE/141029821