CAM High Yield Weekly Insights

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed for their seventh week of gains, which would match the run at the end of last year, though an 11-day winning streak ended Thursday amid broad weakness in equities.
• Though high yield overall lost 0.02%, CCCs continued to rebound from their underperformance
• That riskiest part of the junk bond market returned 01% to post a 12th-consecutive gain, the longest since March
• This week’s fresh gains have followed a bevy of Fed officials acknowledging the economy is slowing and inflation is cooling
• Chicago Fed President Austan Goolsbee was the latest to suggest that the central bank may need to lower borrowing costs soon in order to avoid a sharper deterioration in the labor market
• Spreads have been range-bound despite volatility partly due to positioning, Barclays’ Brad Rogoff and Dominique Toublan wrote on Friday, but also because of expectations that the economy will remain on a good path while credit fundamentals continue to be positive
• Despite the typical summer lull, four borrowers have sold $3b of notes this week, including CCC-rated bonds

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.