SLI's Ennett: 'Yields more' does not equal 'cheap' for bonds

So far in 2015, the European high yield market has defied many by outperforming that of the US. Many had believed the dislocation in US high yield, widely blamed on slumping oil prices at the end of 2014, would leave room for it to outperform Europe in 2015.

Like many, we looked at this dislocation – after all, the two markets had been highly correlated over their relatively short lives – as a potential opportunity. However, when we examined the US market in greater detail, we found once the differences in composition had been taken into account, far from being cheap, it is still expensive compared with Europe. Even more surprisingly we find this still to be the case. It raises an important point we feel is often missed in bond market discussions; 'yields more' does not equal 'cheap'. There is too much analysis comparing markets break dow...