High Yield Morning Update

After a very solid week for the high yield market, posting a 1.88% return on the Bank of America Merrill Lynch High Yield index, we’re opening up with a better tone again this morning with equities rallying. The synthetic HY17 index is better by ½ a point to start this morning and cash bonds feel at least ½ point better with some issues trading up 2-3 points. EPFR data reported another daily inflow on October 20^th into high yield funds, marking the 12^th straight day of inflows, helping push the asset class higher. Earnings are also a big part of this story, as according to Deutsche Bank equity research, with over 40% of the S&P 500 companies reporting so far, 72% have beat estimates, helping ease some concerns that the economy had weakened more than expected.

¹ Data for the sourced from Bloomberg.  All data is based on ending date of Oct 21^st, 2011.