The high yield bond market kicked the week off with a positive day yesterday despite the volatility in equities. Today, the high yield market is mixed, with the big flow names weaker and off the run names remaining solid. Last week we saw the new-issue market bring 11 deals for $7.3B in proceeds, and yesterday we kicked off this week with four deals for $2.35B in proceeds, with all of these deals were well oversubscribed. The forward calendar is steady and building. Moody’s Liquidity Stress Test Index kicked of 2018 with a new low of 2.5%, which we believe points to a positive economic and credit market environment.
Despite outflows from the asset class, there is still a lot of cash on the sidelines looking for yield. Given the continued low rate environment and the record numbers of the world’s population entering retirement age, we believe that the demand for US Treasury Debt will be strong, as well as demand for other fixed income debt such as high yield.