High Yield Daily Update

The high yield bond market is weaker today after Friday’s down close, with the Bloomberg Barclays High Yield Index down -0.03%.*  Interest rates around the globe are fueling some of this volatility as the US 10-year Treasury yield has slipped to 2.81% after holding above 3% for a period.  The real volatility is coming from the Italian yield curve due to the chaos in the government formation.  It’s looking like the next election is September, so hold on to your seats until then.

No high yield bond new-issues priced on Friday, but last week was busy ahead of the holiday weekend.  May is typically one of the busiest months of the year for new-issues but this year it is the second slowest so far.

Oil has resumed its volatility to the downside even as Venezuela and Libya continue to have disruptions.  Talk that the Saudis and Russians will increase production is driving prices lower.  Aren’t there heavy sanctions on Russia or is that fake news?

Inflows into high yield bond mutual and exchange traded funds continued on Thursday and Friday after Lipper reported inflows for the week ending May 23rd of +$261M.  Actively managed high yield mutual funds have posted withdrawals in 18 of this year’s 21wks.

* Bloomberg Barclays U.S. Corporate High Yield Index covers the universe of fixed rate, non-investment grade debt (source Barclays Capital).
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