Junk bonds on recovery path

Yields on junk bonds are now only slightly above their levels in January and lower than their average for 2020. Total returns year-to-date as of Sept. 10 are now slightly positive. At the lows in March, high-yield bond returns were down 20% for the year.

Defaults have slowed significantly. According to Fitch Ratings, the trailing 12-month default rate now stands at 5.7%. Defaults in August and early September were around $2.8 billion, about the same as they were before the COVID-19 crisis.