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.
Although information and analysis contained herein has been obtained from sources Peritus I Asset Management, LLC believes to be reliable, its accuracy and completeness cannot be guaranteed. This report is for informational purposes only. Any recommendation made in this report may not be suitable for all investors. As with all investments, investing in high yield corporate bonds and loans and other fixed income, equity, and fund securities involves various risks and uncertainties, as well as the potential for loss. High yield bonds are lower rated bonds and involve a greater degree of risk versus investment grade bonds in return for the higher yield potential. As such, securities rated below investment grade generally entail greater credit, market, issuer, and liquidity risk than investment grade securities. Interest rate risk may also occur when interest rates rise. Past performance is not an indication or guarantee of future results. The index returns and other statistics are provided for purposes of comparison and information, however an investment cannot be made in an index.