US markets closed in red territory across the board yesterday as enthusiasm waned for the reflation trade that has been in place since the November election results, driving markets to record highs. The yield-to-worst/spread on the Bank of America High-Yield Index backed up for a second consecutive session this week to close at 6.02%/+404bps, off 4bps/7bps on the day. The yield on the index has risen 9 of the past 12 sessions. Issuance was steady yesterday with three deals pricing for $1.085 billion in proceeds after the onslaught of deals over the past several weeks ahead of the Fed’s rate hike. Oil prices plunged to a three-month low of $47.34, down 10 of the past 12 sessions as US stockpiles held steady. The yield on the US 10yr Treasury note closed at 2.42% vs 2.46% Monday, YTD high of 2.63% and low of 2.31%. Overnight, global equities moved lower as investors continue to question US lawmakers’ ability to enact pro-growth policies. S&P 500 futures look set to trade lower again, after a decline yesterday where the index fell more than 1% for the first time this year. Safe-haven government bonds continue to rally, while gold extends recent gains. High-yield bonds are opening with a quiet tone and lower along with other US risk assets, with energy related credits taking the brunt of the pain.
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.