High Yield Daily Update

Its risk on across the board today after the strong non-farm payroll numbers, with construction leading the way.  Despite this report, some wonder if construction will continue to lead if interest rates keep creeping higher, pulling mortgage rates up with them. However, we are not a believer rates will be rising much.

Lipper reported an outflow for the week ending 3-7-18 of -$525M from high yield mutual and exchange traded funds, and then followed by another $292M outflow yesterday.  This was the 8th week in a row of outflows, but was the lightest outflow for active mutual funds in two months.  Lipper reported that high yield loan funds saw an inflow of +$588M on the week, making for inflows in six out of the last seven weeks.  With our active strategy, we are one of the few active fund managers to include both high yield bonds and floating rate loans, giving investors access to credits from the $1.7T global US$ high yield bond market and $1T loan market1.  Three new-issuers came to market yesterday and there are a dozen on the forward calendar.

1  Acciavatti, Peter D., Tony Linares, Nelson R. Jantzen, CFA, Rahul Sharma, and Chuanxin Li, “Credit Strategy Weekly Update,” J.P. Morgan, North American High Yield and Leveraged Loan Research, March 2, 2018, p. 42, 52, https://markets.jpmorgan.com. High yield market size based on the global US$ denominated high yield bond market.  Loan market size based on JP Morgan Leverage Loan Index.
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