High yield bonds were better yesterday but are giving up a little of that today as the markets react to the Fed Chair’s testimony. Rates are higher all along the Treasury curve as the Chair hinted there could be more than the three rate hikes laid out in the December meeting, but also noted that it was dependent on the growth of the economy and wages. On the new issue front, one new coal deal came to market yesterday with a minimum of twelve more on the forward calendar.
The retail sector has a lot of earnings releases this week so we will keep an eye on how the consumer is spending, or not. Remember, the world has a record number of people retiring and that is a headwind to growth and consumption around the globe as those people are generally not out spending, rather they are preserving capital and searching for income to replace their salaries.
JP Morgan threw out a stat today, which was that over the past six weeks we have seen net withdrawals for high yield bond mutual funds & ETF’s total $15.3bn or 7.4% of AUM. That’s a big number but has created muted volatility.