High Yield Morning Update

With the 10-year note trading above 2% again this morning, recent trends would suggest we’d see pressure on high yield bonds, but that has not been the case; at least not yet. Recently priced, sub-5% coupon deals continue to move lower with the move in rates, but high yield in general is proving resilient here, finding some strength yesterday, which has continued in to today’s session. High yield volume continues to be light as most are happy to sit on their holdings, and play the new issue market. With this market backdrop, big outflows can push prices on the index around as the passive ETFs become forced sellers into a market with lukewarm buy interest, as we’ve seen during this recent pullback over the last couple weeks. It feels like guys are stepping in with a little more buying conviction over the last couple days with the index back close to 6%. Stocks are opening this morning mixed, credit indices (HY19 Credit Index) continue to move higher, and high yield cash bonds are flat to slightly better.

The HY 19 Index (Markit CDX North America High Yield Index) is composed of 100 non-investment grade entities, with all entities domiciled in North America.  This index rolls every six months, in March and September.
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