The Dow Jones continues to hit new record highs, notching another 300 points yesterday to close above 21,000 for the first time as investors bet on the Trump administration and global growth. After a brief pause to the high-yield bond rally on Tuesday, credit markets moved in synchrony with equities yesterday pushing the yield-to-worst/spread on the Bank of America High-Yield Index 7bps/17bps tighter to new YTD lows of 5.57%/+357bps. For perspective these levels compare to recent lows of 4.85% and +337bps back on 6/24/2014. No deals priced yesterday but activity returned with two new deals being added to the calendar for $1.3 billion in proceeds. Treasuries weakened across the curve yesterday with the yield on the US 10yr note widening 6bps to 2.45%, as markets are now pricing in an 80% probability of a March interest rate hike. WTI continues to trade with a heavy tone due to the strong dollar and following an EIA report that showed US crude stockpiles at record highs, closing at $53.83, down 0.4% over the past two sessions after hitting an 18-month high of $54.45 last week. High-yield bonds are opening mixed this morning as oil trades lower again and data showed jobless claims fell to 223k for the week ended 2/25, the fewest since March 1973. After a slow stretch for the primary market, things are heating up this morning with several new deals being added to the calendar for pricing over the next couple days.
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.