Category: High Yield Weekly

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed to the biggest weekly loss since mid-August, snapping a two-week gain, after yields jumped 14 basis points to 8.54% on renewed fears that the Federal Reserve will keep interest rates higher for longer.
• Chicago Fed President, Austan Goolsbee, told the Marketplace radio program on Thursday that “we are very rapidly approaching the time when our argument is not going to be about how high should the rates go.” Instead, “it’s going to be an argument of how long do we need to keep the rates at this position before we’re sure that we’re on the path back to the target.”
• Stronger-than-estimated macro data this week also bolstered some speculation that the Fed may hike interest-rates again in November for one last time. US service sector activity rose to a six-month high in August, suggesting a pick up in new orders and hiring, according to an Institute for Supply Management index. Also, applications for US unemployment benefits fell to the lowest since February, indicating a resilient labor market.
• Meanwhile, the junk-bond primary market is gearing for a rush of new supply as private equity firms look to close on LBO deals before the cost of debt rises further.
• It has sprung back to life after a summer lull pricing more than $800 million in just three sessions.
• Barclays estimates $15b-$20b of new bond supply and $20b-$25b in leveraged loans for September. The pipeline may be concentrated in technology, media and entertainment, Barclays wrote in a note this morning.
• US junk bond yields have risen 14 basis points week-to-date to 8.54% and spreads have widened 10 basis points to 376.
• Losses extended across ratings in the junk-bond market. CCC yields rose 14 basis points this week to 12.79%.

(Bloomberg)  Fed Officials Set to Double Growth Forecast Amid Strong Data

• The US economy has been looking so solid lately that Federal Reserve officials will probably need to double their projection for growth in 2023 when they publish an updated outlook later this month.
• Following a string of stronger-than-expected reports on everything from consumer spending to residential investment, economists have been boosting their forecasts for gross domestic product. One widely-followed, unofficial estimate produced by the Atlanta Fed even has it expanding 5.6% on an annualized basis in the third quarter.
• That marks a sharp turnaround from three months ago — the last time policymakers updated their own numbers — when the consensus view was that the economy would stall in the current quarter. And it may be enough to prompt Fed officials to scale back their estimates for interest-rate cuts in 2024.
• “Consumer spending was robust in June and July, so the third quarter is virtually baked in the cake at this point,” said Stephen Stanley, the chief economist at Santander Capital Markets US who is projecting 3.7% growth in the July-to-September period. “5% seems too high, but not impossible.”
• Any read on GDP growth above 3.2% would mark the strongest quarter since 2021, when the US was experiencing a rapid recovery from the initial shock of the pandemic. The acceleration is in stark contrast with the outlook for China, which has been downgraded in recent weeks amid a mounting property crisis.
• When Fed officials last updated their own projections for the US in mid-June, they showed the median policymaker thought GDP would expand just 1% in 2023. At the time, that marked an upgrade over the previous projection round in March, which implied a recession this year.
• That number will probably go up to 1.8% or 2% in the new projections set to be released at the conclusion of the central bank’s Sept. 19-20 policy meeting, and the outlook for the unemployment rate could be revised lower, according to Omair Sharif, president of Inflation Insights LLC.
• The growth upgrade may also lead Fed officials to scale back the easing they had projected for next year, Sharif said.
• The Atlanta Fed tracker — which is separate from policymakers’ quarterly projections — is volatile and will probably be revised down some before the government publishes its first official read on current-quarter growth at the end of October.
• But it underscores the widespread upswing in sentiment over the past few months. Better-than-expected numbers in a monthly Institute for Supply Management report on the US services sector published Wednesday bolstered the theme.
• Despite the rising optimism, the central bank has signaled it will probably leave its benchmark interest rate unchanged at the September meeting.

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.

(Bloomberg)  High Yield Market Highlights

(Bloomberg)  Powell Signals Fed Will Raise Rates If Needed, Keep Them High

• Federal Reserve Chair Jerome Powell said the US central bank is prepared to raise interest rates further if needed and intends to keep borrowing costs high until inflation is on a convincing path toward the Fed’s 2% target.
• “Although inflation has moved down from its peak — a welcome development — it remains too high,” Powell said in the text of a speech Friday at the US central bank’s annual conference in Jackson Hole, Wyoming. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”
• The Fed chief welcomed the slower price gains the US economy has achieved thanks to tighter monetary policy and further loosening of supply constraints after the pandemic. However, he cautioned that the process “still has a long way to go, even with the more favorable recent readings.”
• At the same time, Powell suggested the Fed could hold rates steady at its next meeting in September, as investors expect.
• “Given how far we have come, at upcoming meetings we are in a position to proceed carefully as we assess the incoming data and the evolving outlook and risks,” he said.
• The remarks were in line with Powell’s character and communication for all of 2023: He is singularly focused on the mission of restoring price stability, and further tightening remains on the table to get back to 2% if necessary.
• Policymakers are entering a new phase of their campaign to bring inflation back to the Fed’s 2% target. After aggressive interest-rate increases in 2022, Powell and his colleagues have slowed the pace this year, and signaled they may be close to wrapping up rate hikes. The question now is how long they hold at a restrictive level and how the economy performs under those conditions.
• Officials raised their benchmark rate last month to a range of 5.25% to 5.5%, a 22-year high, after skipping a rate increase at their June meeting. Their most recent projections had one more rate increase penciled in this year.
• Powell signaled Friday that policy has shifted to a more deliberative phase where risk-management is now “critical.”
• He noted the economy may not be cooling as fast as expected, saying recent readings on economic output and consumer spending have been strong. The economy grew at a 2.4% annualized pace in the second quarter, a surprisingly robust reading that prompted many economists to boost forecasts for the third quarter and reconsider odds of a recession.
• “Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said.
• He also pushed back on speculation that the central bank could raise its inflation target, an idea that has been hotly debated mostly by academics in recent months. “Two percent is and will remain our inflation target,” he said.

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.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed toward their worst weekly loss since June after steadily falling for five straight sessions. Thursday’s loss of 41% is the biggest one-day slide in six weeks as yields rose 10 basis points to a more than five-week high of 8.67%.
• Risk appetite softened after minutes of the last Fed meeting indicated that the Fed was not done with raising interest rates. The BB index is on track for the biggest weekly loss since February, with week-to-date negative returns at 0.8%.
• BB yields soared to a five-month high of 7.37%. CCCs may also end the week with the biggest loss in six.
• The Fed minutes did not give a definitive steer on the next rate decision in September, saying future moves “should depend on the totality” of incoming data and its implications for the outlook.
• Wary investors pulled cash from US high yield funds, with an outflow of $1.09b for week ended August 16. This is the fourth consecutive week of outflows from the asset class.
• The June to July rally in junk bonds, fueled by easing inflation pressures and on expectations that the Fed was nearing the end of the rate-hiking cycle, pulled US borrowers out of the sidelines.
• Light primary activity, still solid corporate fundamentals, and broad shifts in index quality and sector composition have all contributed to relatively tight spreads, Amanda Lynam, head of macro credit research at BlackRock Financial Management, wrote last week.

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.

(Bloomberg)  High Yield Market Highlights

• US junk bonds rebound from last week’s losses and are headed to post the biggest weekly gain since mid-July. After steadily rallying for five straight sessions buoyed by a subdued consumer inflation reading, expectations are rising that the Federal Reserve will pause its interest-rate hiking campaign.  The current wave of disinflation has legs, primarily reflecting the lagged impact of past Fed hikes and a downshift in economic activity, wrote Bloomberg economists Anna Wong and Stuart Paul on Thursday.
• The rally in junk bonds gained momentum after the smallest back-to-back gains in US consumer prices in more than two years.
• Philadelphia Fed President Patrick Harker said the US central bank may be able to cease interest-rate increases, barring any surprises in the economy. Richmond Fed President Thomas Barkin said it was too soon to say whether another rate increase at the Fed’s next meeting in September would be appropriate.
• The gains spanned across all high yield ratings, with CCCs, the riskiest of junk bonds, also recovering from last week’s losses to post gains of 0.99% week-to-date, the biggest since mid-July.
• CCC yields tumbled 26 basis points on Thursday to close at 12.79% after dropping in the three of the last four sessions. Yields fell 21 basis points for the week.
• BBs ended the two-week losing streak, with week-to-date returns of 0.28%.
• Goldman Sachs strategists led by Lotfi Karoui and Michael Puempel assess the near-term risks from corporate debt on US economy and markets, and conclude that risks are manageable and are unlikely to present any systemic risk.
• The rally also drove the primary market, with the week-to-date volume at almost $5b pushing the month-to-date tally to more than $7b.

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.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed for the worst weekly loss in six, as risk appetite wobbled on Fitch’s downgrade of US government debt, higher longer-dated Treasury yields and a Senior Loan Officer Opinion Survey that showed tightening lending standards.  While it was business as usual for the primary market, the week-to-date losses, at 0.72%, span the ratings spectrum. BBs, the top ratings in the junk universe, are on track for the biggest weekly loss in almost four months.
• The high yield index yield rose to a three-week high of 8.61%.
• BB yields jumped 22 basis points to 7.27%, a four-week high. CCC yields rose 31bps to 13.15%, also a four-week high.
• CCCs are also poised for the biggest weekly loss in six, with negative returns of 0.83% week-to-date.
• After reaching year-to-date tights at the end of July, spreads widened sharply amid a significant increase in long-dated Treasury yields, Brad Rogoff and Dominique Toublan wrote this morning. These developments, if sustained, could pose a challenge to the soft-landing narrative, they wrote.
• The broader risk-off sentiment initially fueled by Fed survey of senior loan officers renewed concerns of a possible recession and a spike in default rates. The selloff gained momentum after Fitch action on US debt.
• Investors pulled over $1b from US high yield funds for the week ended Aug. 2, the biggest weekly outflow from high- yield funds since May.
• However, US borrowers were largely undeterred. The primary market priced more than $3b this week. And banks, led by Citigroup and Bank of America, are readying to offload some of the debt that helped fund Apollo Global Management’s buyout of the auto-parts maker Tenneco as early as next week.

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.

(Bloomberg)  High Yield Market Highlights

• US junk bonds lost some momentum on renewed concerns that strong macro data will pressure the Federal Reserve to raise rates again, prolonging the most aggressive policy tightening in decades. Junk bonds posted a modest loss of 0.1% on Thursday, on pace to end the two-week gaining streak. Yields jumped nine basis points to 8.44%, the biggest one-day increase in more than two weeks, after rising steadily in three of the last four sessions.
• Gross domestic product accelerated, orders for business equipment were stronger-than-expected and unemployment claims were lower despite an aggressive interest-rate hike campaign with rates at a 22-year high. Fed Chair Jerome Powell said the central bank could raise or hold in September, depending on the data.
• The softness extended across ratings in the US high yield market. The week-to-date losses in single-Bs are 0.03% and BBs 0.16%.
• CCCs, the riskiest part of the US high yield market, bucked the broad trend. CCCs are heading toward third consecutive week of gains, with week-to-date returns at 0.38%, after rallying for straight sessions.
• The gains in CCCs were partly fueled on expectations that the economy will dodge recession.
• “The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” Powell said Wednesday during a press conference following a policy meeting.
• US high yield funds reported an outflow of $376m for week ended July 26.
• The primary market was steadily building up, though a tad cautiously, as US borrowers took advantage of strong technicals, namely light supply.
• New bonds were inundated with demand as investors looked for new paper amid thin supply.

(Bloomberg)  Fed Raises Rates as Powell Keeps Options Open for Future Hikes

• The Federal Reserve resumed raising interest rates and Chair Jerome Powell left open the possibility of further hikes, which he emphasized will depend on incoming data that has recently signaled a resilient US economy.
• After pausing rate increases in June, policymakers lifted borrowing costs again at their policy meeting on Wednesday for the 11th time since March 2022 to curb inflation. The quarter percentage-point hike, a unanimous decision, boosted the target range for the Fed’s benchmark federal funds rate to 5.25% to 5.5%, the highest level in 22 years.
• While Powell pointed to encouraging signs that the Fed’s rate hikes are working to curb price pressures, he reiterated that policymakers have a long way to go to return inflation to their 2% goal.
• The Fed chief refused to be pinned down on when officials may hike again, citing a raft of economic reports due before the Fed’s next meeting in September, including two jobs reports, two reports on consumer-price inflation and data on employment costs.
• “All of that information is going to inform our decision as we go into that meeting,” he said. “It is certainly possible that we would raise [rates] again at the September meeting, if the data warranted. And I would also say it’s possible that we would choose to hold steady at that meeting.”
• Markets took the decision in stride. Swaps traders held fairly steady the probability they see of the Fed hiking rates by an additional quarter point before year’s end. The pricing implies just slightly over 50% chance of another bump higher before the Fed tightening cycle ends.

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.

(Bloomberg)  High Yield Market Highlights

• The US junk-bond rally stalled after data showing a resilient labor market renewed concerns that the Federal Reserve may not stop its interest-rate hikes after the quarter-point move expected next week.  The securities posted a modest loss of 0.03% on the week as yields rose seven basis points to 8.36. The weakness extended across ratings as CCC yields jumped nine basis points to 12.66% and BB yields 11 basis points to 7%, the most in two weeks.
• Though the rally paused on Thursday after the labor data, tightening spreads, easing recession concerns and steadily declining inflation continued to draw cash into the market.
• US high-yield funds reported cash inflows of $2.22b for week ended July 19, the first in three weeks, driving demand for new bonds.
• The primary market revived, pricing more than $3b this week, driving month-to-date tally to almost $4b.
• The recent rally was primarily fueled by expectations the Fed’s move in the next meeting would be its last.

(Bloomberg)  Goldman Sachs Says This Yield Curve Inversion Is Different

• While the deeply inverted yield curve has stoked anxiety among investors about the prospect of a recession, Goldman Sachs Group Inc. has a different message: stop worrying about it.
• “We don’t share the widespread concern about yield curve inversion,” Jan Hatzius, the bank’s chief economist wrote in a note Monday, cutting his assessment of the probability of a recession to 20% from 25%, following a lower-than-expected inflation report last week.
• Hatzius stands in opposition to most investors who point out that the curve inversion has an almost impeccable track record of foretelling economic downturns. The three-month T-bills yielded more than 10-year notes before each of the past seven US recessions. Currently, the short-term yields are more than 150 basis points above the longer-maturity notes, close to the biggest inversion in four decades.
• Normally, the curve is upward sloped because investors demand higher compensation — or term premium — for holding longer-maturity bonds than short-term ones. When the curve turns upside down, it means investors are pricing in rate cuts large enough to overwhelm the term premium, such a phenomenon only occurs when recession risk becomes “clearly visible,” Hatzius explained.
• This time, though, things are different, the economist said. That’s because term premium is “well below” its long-term average, so it takes fewer expected rate cuts to invert the curve. In addition, as inflation cools, it opens “a plausible path” to the Federal Reserve easing up on interest rates without triggering a recession, according to Hatzius.
• When economic forecasts became overly pessimistic, Hatzius added, they put more downward pressure on longer-term rates than justified.

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.

(Bloomberg)  High Yield Market Highlights

• The US junk bond market is headed toward the third week of gains largely propelled by the riskiest part of the junk market even after the Federal Reserve left the door open for future hikes. The CCC segment is on track for the biggest weekly gains since mid-April at 1.2%.  Easing concerns about an imminent recession after Fed revised the growth forecast for 2023 to 1% — up from the March projection of 0.4% — pushed CCC yields to a four-month low of 12.84% after steadily declining for seven sessions in a row. That’s the longest falling streak since mid-January. CCC spreads also dropped to a four-month nadir of 859 basis points after falling for three consecutive sessions.
• US junk bonds rallied across the board. Yields tumbled to a six-week low of 8.53%. Spreads closed at 408 basis points.
• BB yields fell to a two-week low of 7.05% and single-Bs to a six- week low of 8.74%.
• BBs extended gains for the third straight session, with week-to-date returns at 0.28%. Single Bs rallied for six sessions in a row and are on track post gains for the third consecutive week, with week-to-date returns at 0.42%.

(Bloomberg)  JPMorgan’s Michele Says Exit ‘Cash Trap’ for Bonds on Rate Call

• It’s time to exit the “cash trap” of money market funds and move into bonds as the Federal Reserve is set to pause its rate-hike campaign and then cut as soon as September, according to Wall Street veteran Bob Michele.
• “If we are right and we’ve seen the last Fed rate hike and the market starts pricing in rate cuts and they start cutting rates, then those cash returns will start to evaporate,” Michele told Bloomberg Television’s The Open on Wednesday. With a switch to bonds, “you will have locked in not only the carry but will also get some capital appreciation,” he said.
• The chief investment officer for global fixed income at JPMorgan Investment Management Inc., who has previously recommended five-year Treasuries and US investment-grade corporate bonds, said the central bank is set to hold rates “where they are” when its policy-setting committee meets on Wednesday. Michele sees the US economy entering a recession within a year as unemployment rises.
• “Unemployment at 4.5% is recession, I don’t think there’s ever been a jump of 1.1% in unemployment and the NBER (National Bureau of Economic Research) hasn’t come in and said we’re in recession,” Michele said. “So the Fed is predicting recession there.”
• Price pressures haunting the Fed will continue to fade, according to Michele, who sees the disinflationary trend as “intact.” Tuesday’s consumer price index report showed inflation decelerating, followed by US producer prices declining in May, bolstering expectations that the Fed will be on hold this month.
• The market for wagers on the outlook for central bank policy shows traders now expect the benchmark rate to peak in September, instead of July.
• “We have never gone from the last rate hike to recession without the Fed cutting rates before then,” Michele said. “If everything we are seeing is telling us a recession by year-end, I am still sticking with September as the first rate cut.”

(Bloomberg)  Powell Says Nearly All Officials Expect ‘Some’ Further Fed Hikes

• Federal Reserve officials paused on Wednesday following 15 months of interest-rate hikes but signaled they would likely resume tightening at some point to cool inflation.
• “Holding the target range steady at this meeting allows the committee to assess additional information and its implications for monetary policy,” the Federal Open Market Committee said in a statement released in Washington Wednesday.
• The decision left the benchmark federal funds rate in a target range of 5% to 5.25%.
• The FOMC vote was unanimous. Of the 18 policymakers, 12 penciled in rates at or above the median range of 5.5% to 5.75%, showing most policymakers agree further tightening is needed to contain price pressures. The forecasts imply officials expect two additional quarter-point rate hikes or one half-point increase before the end of the year.
• Chair Jerome Powell said nearly all Fed officials expect it will be appropriate to raise interest rates “somewhat further” in 2023 to bring down inflation. He declined to say whether another hike could come as soon as July.
• “Inflation pressures continue to run high and the process of getting inflation back down to 2% has a long way to go,” Powell said at a post-meeting press conference.
• The committee “judged it prudent” to hold rates steady this month given how quickly rates have risen, he added, saying the pause is a continuation of the moderating pace of policy measures.
• “We’ve covered a lot of ground and the full effects of our tightening have yet to be felt,” the Fed chief said.

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.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are heading for a modest weekly gain as investors debate whether the Federal Reserve will pause its tightening campaign or keep rates higher for longer following the example of the Bank of Canada.
• Signs of bullish sentiment can be seen as US high yield funds reported a cash haul of $2.5b for week ended June 7, according to Refinitiv Lipper, marking a U-turn after investors pulled $4.7b in four of the five weeks in May.
• The week-to-date gains are 0.16%.
• Yields rose seven basis points week-to-date to 8.61% and rose in two the last four sessions after dropping for two consecutive weeks.
• While the high yield market slowed down a tad this week, CCCs outperformed BBs and single Bs, with week-to-date returns of 0.73% compared to a loss of 0.1% and a gain of 0.3% in BBs and single Bs, respectively.
• CCC yields dropped 6 bps on Thursday to close at 13.22%. Yields fell in two of the last four sessions.
• CCCs have been some of the best performing assets in the US corporate debt market this year, with year-to-date returns of 7.62% compared with 2.59% in investment grade, and BBBs in particular, with 2.76%.
• Risk assets have rallied materially in the last couple of weeks on strong technical backdrop, Barclays’s strategists Brad Rogoff and Dominique Toublan wrote this morning. The rally has been helped by a combination of higher yields and lower tail risk expectations, they wrote.
• The primary market priced more than $4b this week as borrowers took advantage of the risk-on sentiment.

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.

(Bloomberg)  High Yield Market Highlights

• US junk bonds are headed toward the third straight week of losses and the biggest weekly loss in more than two months, pushing yields to a seven-week high on worries over negotiations to raise the debt ceiling. The week-to-date loss is 0.45%.
• The losses spanned ratings categories. US high yield funds reported an outflow of $1.15b for week ended May 17, the third consecutive week of outflows.
• Yields have risen amid higher inflation expectations and hawkish commentary from Fed officials, while the outlook for economic growth has deteriorated across major developed markets, Barclay’s Brad Rogoff wrote in a note.
• This creates greater uncertainty about the June Fed decision, Rogoff wrote.
• Even as yields rose steadily and nervous investors stayed on the sidelines, the primary market saw a deluge of new issuance, with borrowers rushing to get ahead of any jumps in yields spurred by gridlock in the negotiations to raise the US debt ceiling.
• As US borrowers made a quick dash to the market, the week-to-date tally rose to $3.5b. The month-to-date supply jumped to more than $13b. The year-to-date volume stood at almost $71b.
• CCCs have bucked the overall trend as yields dropped on Thursday to 13.49% and has risen by just 6bps week-to-date versus a 35bps jump single B yields and 17bps in BBs.
• BBs posted losses for six days in a row and are on track to see the biggest weekly decline, with week-to-date losses of 0.54%, the biggest since March 10.

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.