High yield bonds finished slightly higher yesterday and are opening slightly higher today.  Much of the focus was on the new-issue market as three deals came for $1.1B in proceeds, bringing this week’s totals to nine deals for $4.65B in proceeds.  A few more deals are expected today for a total close to $5B in proceeds.  OPEC agreed to keep their curbs in place through March of 2018 but oil is still off a bit.  The battle will wage on between OPEC production cuts and the US Shale production increases.  The question we see is, can the US Shale producers raise enough money to keep bringing on more wells/production after the “easy” wells are brought back on?  But, nothing has changed here, as decline rates in the Shale basins are still very steep and costly.  Treasury yields are slightly higher this morning.  At 2.26%, the 10-yr Treasury is well below the YTD high of 2.62%, even in the face of a probable Fed hike next month.  Could it because the expected US GDP growth rate most likely won’t be fueled by tax and business reform as the dysfunction in Washington is at epic levels?  With a small inflow into retail mutual and exchange traded funds yesterday, it looks like the index ETF’s are buyers this am.  The yield-to-worst on the JP Morgan US High-Yield Index stands at 6.01% versus the yield-to-worst for the JP Morgan European Currency High Yield Index at 3.54%, with spreads also substantially higher for the US market versus the European market.¹

¹  Jantzen, Nelson, CFA and Peter Acciavatti, “JPM High-Yield and Leverage Loan Morning Intelligence,” J.P. Morgan North American Credit Research, 5/25/17, https://markets.jpmorgan.com/?#research.na.high_yield.