High Yield Hesitation
High yield has faced some headwinds thus far in 2018, but fundamentals remain solid. Additionally, weakness has mostly been equity-market driven, and generally not tied to specific concerns around credit. Worries over a more aggressive Federal Reserve (Fed), increased deficit spending, and thus, higher interest rates could negatively affect fixed income investments broadly, including high yield. Spreads have widened, and subsequently recovered, in sympathy with equities thus far in 2018. Figure 1 shows the extent to which equities and high-yield spreads can move in tandem.
Fundamental Backing
Under the hood, fund
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