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US High Yield Market Outlook and Positioning
Wednesday 17 April 2024
Investment Talks
US High Yield Market Outlook and Positioning
April 2024 | Although first-quarter returns proved to be anemic, at least they were consistent. Across the quarter, monthly returns were positive and spreads moved tighter. With inflation's decline stalling, short-term rate expectations stabilized. Within high yield, Treasury yield increases largely negated the effects of tighter spreads, leading to returns near the index's coupon yield. Although CCCs were the best performers in the US and globally, the US High Yield Distressed Index (comprised of issuers with spreads over 1000 basis points) underperformed the broader US high yield market, indicating investors were more interested in high-yielding bonds than in potential workouts.
01 | First-quarter high yield index performance was positive but unexciting as small price losses were offset by coupon income.
02 | Inflation data continued to drive the markets: During the first quarter, US Treasury bond yields increased as inflation figures surprised on the upside and growth remained strong.
03 | US Federal Reserve voters have firmly indicated cuts are coming: however, timing is dependent on inflation slowing, which is challenging with the US economy growing faster than expectations.
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Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of March 31, 2024 . Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the [author] and not necessarily Amundi Asset Management and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product or service. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not indicative of future results. Amundi US is the US business of Amundi Asset Management.
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Remain agile in bond selection, with an eye on last mile inflation
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