It's Like 2009 for Some Asset-Backed Securities Rattled by the Fed
- Yields Relative to Benchmark Rates Generally Widest in Years
- Broader Market Concerns Ahead of Fed Move Hitting Bonds Hard
Asset-backed securities -- bundles of debt mainly tied to consumer borrowing -- are taking a hit as investors become increasingly rattled by broad financial issues, including the Federal Reserve possibly raising interest rates next month.
While bonds ranging from corporate notes to mortgage-linked securities also have suffered recently, they aren’t losing as much ground as ABS, or at least when it comes to the yields compared to benchmark rates. In ABS, this spread shows that “many market segments are at or near the post-crisis wides established in 2010,” according to Wells Fargo & Co. analysts John McElravey and Ryan Brinkoetter. Bank of America Corp. described them as “at the wide end of three-year trading ranges and even five-year trading ranges.”