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This thesis can be true or false depending on how interest rates go up. In general, a steady rise of interest rates has a very different effect on the markets and economy than a spike. A sudden spike (not sure what would cause this) would hurt the high yield portfolio, a gradual rise not so much as an improving economy will also decrease credit risk of existing bonds counteracting the decreasing spread and spreads for new bonds will be determined by credit risk as usually happens with high yield.
The biggest danger for junk bonds is a deteriorating economy increasing defaults. The argument seems rather tenuous to say the least.
They may also be talking the book to drive investments into shorter term high yield.
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The biggest danger for junk bonds is a deteriorating economy increasing defaults. The argument seems rather tenuous to say the least.
They may also be talking the book to drive investments into shorter term high yield.