High yield bonds are a touch weaker today, bucking the big downside in equities. Money is seeking a safe-haven, hence the 10-year Treasury yield is down to 2.74%. The various high yield indices finished in the red for the first quarter. We are seeing a rise in raw materials as per the release of US Factory PMI numbers and money flowing into gold and silver.
Worries of a global trade war are weighing on equities, but I think this only brings the sides together for some real negotiating, as the US can’t keep running a $1 trillion deficit given we already have $21 trillion in debt, not counting all of the off-balance sheet debt. This is yet another reason why we don’t see rates rising a whole bunch—the government couldn’t support the debt load payments and think about mortgage rates rising when wages haven’t.
According to Lipper, high yield bond mutual and exchange traded funds saw another weekly (week ending 3/28) outflow to the tune of -$619M, which brings it to outflows in ten out of last eleven weeks. Meanwhile floating rate loans funds saw another inflow, +$332M pushing that to a positive week for nine of the last ten.