High Yield Morning Update

A heavy tone continued to drive the high yield market lower yesterday as the FOMC meetings got underway, with the yield-to-worst/spread on the Bank of America High-Yield Index pushing wider for the eighth straight session to close at 6.19%/+405bps, down 10bps/11bps on the day and 62bps/48bps since the slide began. It took a winter storm in NYC to pause the issuance activity with no new deals pricing yesterday, though MTD issuance stands at $25.075 billion making it the busiest month since September after last week’s record setting pace. Issuance spiked over the past couple weeks as the Fed hike talk moved sharply from a gradual hike in rates to a near certain hike this week as market expectations went from 32% on Feb 1st to 80% on March 1 and 100% on March 8. WTI closed at a three-month low of $47.72, down 1.4% on the day. Money continues to flow out of the high-yield market this week with an estimated $3 billion outflow WTD after last weeks $2.12 billion outflow (flows from mutual and exchange traded funds, reporting week runs Thursday to the following Wednesday). The 10yr Treasury note yield closed at 2.60% versus a 32-month high of 2.63% yesterday. This morning the market is bouncing as oil recovers from its recent slide and the market awaits the Fed decision this afternoon at 2PM ET.

The Bank of America Merrill Lynch US High Yield Index monitors the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.  Index data sourced from Bloomberg. Yield referenced is the yield-to-worst and spread referenced is the spread-to-worst.
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