High Yield Daily Update

The Bloomberg Barclays US High Yield Index was up 0.02% yesterday,* while the high yield bond market is again flat today despite oil and gold being lower again.  Fed Chair Jerome Powell is sticking to the comments from the last meeting that gradual rate hikes are still to come and that the economy is doing well.  Industrial Production beat estimates but under the hood it was driven by autos, and if you take that out manufacturing, it was a slight miss.

Oil is down again today approaching the 100 day moving average.  Normally when we see oil down during the peak driving season and gasoline prices higher, we see refiners buying cheaper oil to make and sell more expensive gas.  This is not happening as gas has weakened more than oil. Also, it looks like the Saudis, Libyans and Iranians are producing slightly more expected, thus causing weakness.

There was a slight outflow yesterday for high yield mutual and exchange traded funds and no new-issues priced, but two issuers are on the docket for today for ~$2B in proceeds.  This scenario and the fact the US economic climate looks much better than that for many non-US corporate debt issuers, the bid remains in the domestic secondary high yield bond market.

* 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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