US Treasury yields are lower with the 10-year now at 2.12%, fueled by more weak economic news today with durable and capital goods much weaker than expected. We see this as another sign that negative demographics are weighing on big ticket spending. Europe is higher and excited today, seemingly because the Italian government is spending billions shutting down two banks. In the high yield market, there are seven new-issue deals on the books for this week, after only one deal pricing on Friday. High yield new issue bond sales are up 10% over 2016 but the number of deals are up 50%.1 With the continued low rate environment, we believe the need for high yield will remain. Loan prices were hit last week and continue this week as Treasury yields move lower. Outflows from both loans and bonds took the market lower last week. The number of loans trading above par is now at 53.9%, down from 76% back in March.2 We are in the heart of summer as the fourth of July holiday schedule has kicked in, Monday’s and Friday’s are dead while the three day work week is robust. With a light earnings calendar through the holiday, we don’t see a lot in terms of catalysts for the markets over the next couple weeks.
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.