It is risk on again today as high yield bonds are better along with equities soaring, as the DOW blows past 23,000. Sellers of longer maturity Treasuries are driving the yields higher as the 10-year sits at 2.33%. It looks more and more like the Fed will raise rates again in December as the Bloomberg’s World Interest Rate Probability calculator sits at 84%, up from 69% just two weeks ago.
The high yield new-issue market only produced one small deal yesterday but three more were added to the calendar bringing it to nine. With the Fed expected to raise rates in December, where will new-issuers price their coupons as the yield curve flattens?
Given the demand for yield continues and certain parts of the high yield bond and loan markets are tight from a historical perspective, where does one still get decent tangible yield for their clients that want to live off of cash flows rather than other means? See our piece, “Finding Value” to read about the value we see that is still available in today’s high yield market.