Definition
Bonds from borrowers rated below investment grade, which pay higher interest to make up for higher risk. Also called junk bonds.
The story
Below a BBB-minus rating from S&P or Fitch (Baa3 from Moody's), a bond is considered speculative. Investors get more income, but defaults are more common, and these bonds tend to fall with stocks when fear rises.
Why markets watch it
High-yield bond prices are a closely watched gauge of risk appetite.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms