Quite a few eyeballs on the high yield market as it descent below the 5% yield mark has drawn attention like never before. Spreads to risk-free treasuries are still not at the lows, but remember that spreads earlier (low or otherwise) were set against a backdrop of much higher rates. As we have explained before, this makes the asset class very sensitive to treasury rates and for example, the recent march-up in treasury rates may portend a temporary decline in credit price performance. But then again, every step down seems to elicit “buy” interest afresh as the QE system exhorts us to “buy on the dip”.
We have seen inflows this week of close to a billion into the sector spread across ETFs and mutual funds.
Actives: HPQ, DELL, TPORT, JCP, ANR, WIN, AKS, CZR
investment grade +72 bps over swaps (unchanged)
High yield .. $106.75 price, 5.75% yield.
Emerging market +110 bps over swaps