High Yield Morning Update

Safe haven assets continued to strengthen yesterday with treasuries rising for a fourth straight day and gold rising to a three month high amid heightened global political unrest. The yield-to-worst/spread on the Bank of America High-Yield Index widened for the third consecutive day, closing at 5.82%/+398bps, off 4bps/5bps on the day and wider by 5bps/7bps on the week. Despite increased volatility in the markets, the high-yield primary issuance onslaught continued unabated with five deals for $2.5 billion pricing yesterday, taking the WTD total to $6.9 billion, already making it the second busiest week of 2017. MTD supply of $12.5 billion is up 33% from last February. WTI gained on the day after a surprise report showed that US gasoline supplies slid, closing at $52.34 up 0.3%. The yield on the US 10yr note closed at 2.32%, down 7bps on the day and 15bps from last Friday’s close. ¬†Overnight, US Treasuries halted their longest stretch of gains in months and gold backed off its highest level since November. This morning, data showed applications for unemployment benefits in the US unexpectedly declined last week to an almost three-month low, echoing a vibrant job market. High yield has remained steady and resilient over the first month and a half of the year with robust new issuance pace and steady secondary buying across the board. More of the same this morning.

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.
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