High yield was mixed yesterday showing the first signs of any weakness in quite some time amid steady stocks and oil, as corporate earnings drove trading. The yield to worst on the Bank of America High-Yield Index widened for the first time in a few weeks to close at 5.64%, off 2bps on the day, while the spread on the index continued to tighten closing at +374bps, -1bp on the day. The primary market remained on hold as companies make it through earning season with refinancing activity expected to resume in the near future. WTI closed at $54.01 vs $54.05. The US 10yr Treasury note closed at 2.39% vs 2.37%. Overnight and into this morning, risk markets are responding positively to President Trump’s first speech to Congress last night, while also shifting focus to the timing of a US interest rate hike. The odds of an increase in March rose to more than 60%, pushing the USD higher and dragging Treasuries lower, with the yield on the US 10yr note wider by 8bps in early trading to 2.47%. High yield is opening largely unchanged and quiet with yields and spreads sitting near multi-year lows. Focus will remain on earnings and a new issue calendar that is showing some signs of life with a few deals building for tomorrow.

The Bank of America Merrill Lynch US 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.