High Yield Daily Update

The high yield bond market was better yesterday but all eyes are on the Fed press conference today.  Recent inflows into high yield mutual and exchange traded funds have added cash bids to both the new-issue and secondary markets.  Three smaller-sized new issues priced yesterday for only $625M in proceeds, while another half dozen are on the forward calendar.

Oil is over $50 per barrel today while the Treasury long-end has a small rally, with yields down a tad.  What to see some yields on various 10-year government bonds around the globe?

US  2.23%

Germany   0.4%

Japan   0.0%

Switzerland   -0.1%

As per high yield bond market yield levels, take a look at the two JP Morgan’s High Yield Indices:1

JP Morgan European Currency HY – 3.28% yield-to-worst

JP Morgan US HY – 5.92% yield-to-worst

We believe the moral of the story is that you need to be an active investor to unlock value above average index and risk free returns.  The world is not growing much as witness by those government bond yields and with demographics playing against it, commingled with Washington, DC gridlock we believe we will remain in this subdued state.

1  Jantzen, Nelson, CFA and Peter Acciavatti, “JPM High-Yield and Leverage Loan Morning Intelligence,” J.P. Morgan North American Credit Research, 9/20/17, https://markets.jpmorgan.com.
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