The high-yield market continued its recent rally this week bolstered by improving economic data, oil price stability, optimism around China and record inflows to the asset class. Commodity-sensitive, energy and metals and mining credits led the rally over the past week, after being the worst performers through the downturn. The yield to worst and spread on the Bank of America High-Yield Index (BAML) tightened 57bps and 72bps since last Friday, closing at 8.59% and +708bps, respectively. Since hitting a credit cycle and year to date high of 10.10% on 2/11, the yield to worst on the index has tightened 151bps while returning 6.84% in just 16 business days as the asset class remains captive to volatile swings.

Investors poured almost $5 billion into high-yield retail mutual and exchange traded funds for the week ending March 2, the largest single weekly inflow on record according to Lipper data. The previous record was a $4.25 billion inflow for the week ending Oct. 26, 2011. This was the third consecutive weekly inflow for a total infusion of $7.77 billion over the span, pushing the year to date total back into positive territory at a $2.61 billion inflow. Despite the inflows and positive momentum to the market, high-yield new issuance remained muted with just three new deals for $3.705 billion allocating for the week.

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. BAML HY represents the index yield for the designated date, while return/change represent the index return for the period ending date. Yield referenced is the yield-to-worst and spread referenced is the spread-to-worst.