January 2025 US High Yield Market Outlook & Positioning

Friday 10 January 2025

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January 2025 US High Yield Market Outlook & Positioning

January 2025 | Although full year 2024 returns for High Yield were strong and spreads tightened during the fourth quarter, fourth quarter returns were weak with losses in both October and December due to yield curve headwinds. While defaults have moderated over the last few months, Moody’s recently increased its year-end global speculative grade default by issuer forecast to 4.6% on weaker US employment. Moody’s also projects the global default rate by issuer count to decline steadily across 2025, reaching 2.7% by next November.

01 | 2024 High Yield Index performance was strong, driven by spread compression in spite of rising sovereign yields.

02 | Although spreads compressed during the fourth quarter, returns were minimal due to sovereign headwinds.

03 | CCCs and Distressed outperformed as spreads compressed and some oversold issuers reported positive idiosyncratic developments.

January 2025 US High Yield Market Outlook & Positioning

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Unless otherwise stated, all information contained in this document is from Amundi Asset Management as of September 30, 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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