Corporate America’s Interest Payments Are Fueling a Market Rally

The Federal Reserve’s rate hike campaign is boosting corporate bonds in an unexpected way, as investors plow coupon payments back into the market.

Investors’ rising income from their corporate bond holdings is giving them more money to buy corporate bonds now. The total income generated by the high-grade corporate credit market should be around $369 billion this year, or 15% more than last year, according to an analysisby Bank of America Corp. strategists.

The coupon payments that investors are getting are relatively high compared with the bonds for sale. For the second half of 2024, total corporate coupon ...