US markets closed in red territory across the board yesterday as enthusiasm waned for the reflation trade that has been in place since the November election results, driving markets to record highs. The yield-to-worst/spread on the Bank of America High-Yield Index backed up for a second consecutive session this week to close at 6.02%/+404bps, off 4bps/7bps on the day. The yield on the index has risen 9 of the past 12 sessions. Issuance was steady yesterday with three deals pricing for $1.085 billion in proceeds after the onslaught of deals over the past several weeks ahead of the Fed’s rate hike. Oil prices plunged to a three-month low of $47.34, down 10 of the past 12 sessions as US stockpiles held steady. The yield on the US 10yr Treasury note closed at 2.42% vs 2.46% Monday, YTD high of 2.63% and low of 2.31%. Overnight, global equities moved lower as investors continue to question US lawmakers’ ability to enact pro-growth policies. S&P 500 futures look set to trade lower again, after a decline yesterday where the index fell more than 1% for the first time this year. Safe-haven government bonds continue to rally, while gold extends recent gains. High-yield bonds are opening with a quiet tone and lower along with other US risk assets, with energy related credits taking the brunt of the pain.

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.