High Yield Daily Update

The Bloomberg Barclays US Corporate High Yield Index was up 0.12% yesterday*, while high yield bonds along with most other markets are mostly flat today as I think everyone has the Korean flu from being up all night watching the meeting.  One high yield bond new-issue priced yesterday and only three are on the forward calendar for $2.5B in proceeds.  High yield bond issuance YTD is down 30% versus the same period in 2017, while floating rate bank loan issuance is up 18%.  I think this will pick up once the Fed meeting concludes tomorrow with an expected rate hike.  Given the fact that CPI is now outpacing wage growth, many are pondering whether the Fed will temper its three hikes in 2019.

We have seen small inflows come back into high yield bond mutual and exchange traded funds after a big outflow number posted last week.  Given the 10-year Treasury yield has been pretty steady around this 2.95% number and a lack of new-issues, investors are seemingly content to hold and collect a coupon.

* 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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