The Federal Reserve raised its benchmark lending rate yesterday, as was widely anticipated by the market, and reiterated guidance for two hikes this year while keeping the long term target unchanged. Markets responded favorably with all US risk assets gaining ground as investors remain optimistic about the economy. The yield-to-worst/spread on the Bank of America High-Yield Index tightened for the first time in 10 sessions closing the day at 6.07%/+402bps. The pace of issuance remained slow with just one deal priced for $375 million, taking the MTD total to 40 deals and $25.45 billion in proceeds. Despite the turn in sentiment yesterday, WTD retail mutual and exchange traded fund flow data still shows a massive outflow of over $4 billion Thursday through Tuesday. WTI gained over $1 yesterday as EIA data showed that crude, gasoline, and distillate stockpiles all dropped while the market had priced in a further gains. This morning, yesterday’s rally is extending as markets continue to gain ground after the Fed statement eased some of the recent tension. High-yield is opening well bid as investors reenter the market looking for bargain pricing after the 9 day slide in prices with energy leading the way as oil advances for a second day. Four new deals are slated to price this afternoon.
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.