The same yield compression has until recently made high-yield issues less compelling.
The interest-rate gap shrank between high-yield issues and Treasuries.
Meanwhile, the sickliness of the corporate bond market is also seen in the rising interest rates that high-yield issues must pay to attract investors.
And the good feeling spilled over into most other high-yield issues, where price gains of two points or more were recorded.
Nearly every other significant asset class fared worse, too, including investment-grade bonds and less creditworthy high-yield issues, foreign currencies and commodities like gold and oil.
She meant that she expected prices of high-yield issues to hold up well if Treasury yields begin to rise and their prices decline.
The average bond fund, despite the full-quarter increase in yields, was up 1 percent, led by specialists in emerging-market and high-yield issues.
The combination of iffy economic conditions and robust corporate results pushed down interest rates on Treasury bonds and high-yield issues alike.
The spreads, or differentials, between telecommunications bonds and government securities are widening -- not just for high-yield issues, but for investment-grade debt, too -- as investors demand higher returns for bearing the growing risks associated with financing costly new services.
This is now at a record level of 45% of all high-yield issues, up from 29% on September 11th this year and 10% at the start of January.
For the intermediate term of 12 months, Merrill Lynch accorded an "above average" opinion to three "high-yield" issues (Carolina Power and Light, Niagara Mohawk Power and Pacific Gas and Electric) and four "yield-plus-growth" stocks (Atlantic City Electric, Scana Corporation, Southern Indiana Gas and Electric and TECO Energy).
