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The drop in mortgage rates, coupled with a steep decline in government bond yields, is prompting investors to reconsider riskier, albeit higher-yielding investment-grade corporate bonds.
Their demand for higher-yielding subprime mortgages and their creation of even higher yielding derivatives on those mortgages generated an irresistible incentive structure that was a ticking time bomb just waiting to blow up.
Higher-yielding investment trusts were seen as ideal.
(It was easier to find buyers for lower-rated, higher-yielding securities).
If rates decline, investors could take money out of Treasuries and seek higher-yielding assets.
But many workers are reluctant to invest in higher-yielding stock funds because of their volatility.
Similar(6)
The prospect of a rate cut sent shares higher in Australia as investors chased higher yielding banking and mining stocks.
Another higher risk option is to invest directly in some higher yielding individual shares.
For example, we're doing research and development on new varieties of coffee and cocoa that are more drought-resistant and higher yielding.
A lower interest rate weakens the value of the dollar as investors dump low-yielding American securities in favor of higher yielding securities in Europe.
The preferreds are higher yielding, can be bought in smaller quantities and are easier to trade.
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