It appears that a rotation has started sector-wise from fixed income into equities. This has largely by-passed high yield for now, given the relatively high yield still sought by income seekers. The rotation is probably a normal course given the paucity of yields in the investment-grade and risk-free areas and interest rate risk creeping back into the radar of most participants. The US economy is picking up traction and a sense of optimism about future earnings, housing numbers and employment has taken center stage at least at the beginning of the year.
Notable numbers for credit:
Investment Grade .. +89 bps over swaps
High Yield … $104.5 on average
Emerging markets … +113 bps over swaps
The long Treasury pierced 3% and has hung around there for a few weeks. Previously, that mark would indicate a quick rush back into the Treasury but this time, it has wavered there with scant attention, adding to the risk-on moves by the market of late.