Bond Duration at Record High

Bloomberg reports that durations on corporate bonds are at a record high.

Duration measures a bond's sensitivity to changes in interest rates.  Higher duration bonds are more sensitive to changes in interest rates.  Should interest rates increase, investors holding high duration bonds could suffer record losses.

Bloomberg reports that the Bank of America Merrill Lynch Index is at a record 5.69 years.

This record duration reflects the fact that many corporations have been issuing long-dated bonds.  Bonds with more time to maturity have higher duration.

Fixed income investors may be setting themselves up for painful losses should interest rates increase from their current historic lows.