High-yield was weaker Thursday, along with the rest of the world, but continued to hold in better than equities and volume remained on the thin side. The yield and spread on the Bank of America High Yield Index (BAML) widened 11bps and 13bps Thursday closing at 8.94% and +724bps. Money continued to flow into haven assets throughout the day pushing the yield on the US 10-year Treasury note 3bps tighter to 2.16%, the lowest close since 12/11/15. Weekly high-yield fund flows for the holiday shortened week came in at -$809 million for the first trading week of the new year. When compared to the third and fourth largest outflows on record during mid-December, these outflows are mild. Since the start of the new year we’ve seen high-yield significantly outperform equities with a total return of -0.38% on the BAML HY Index versus -5.17% for the Dow and -4.88% on the S&P 500 as equities play catch up to credit which underperformed in 2015. This morning high-yield is opening better by ¼ of a point generically as global markets halt their skid after Chinese state controlled funds stepped in overnight to stabilize their market and US payroll data come in stronger than expected. One deal priced Thursday for Microsemi, raising $450 million in new 9.125% debt. This was the first primary deal since December 11th.

The Bank of America Merrill Lynch High Yield Index monitors the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market.  Index data sourced from Bloomberg. Yield referenced is the yield-to-worst and spread referenced is the spread-to-worst.