Connect with us

Hi, what are you looking for?


US Excessive Yield Bonds Face Headwinds as Inflation Stalls: Nomura Experiences

To receive market updates in your inbox, subscribe to the newsletter Global Macro Playbook. US high yield bonds edged lower in April, with the ICE BofA US High Yield Constrained Index (HUC0) declining 1.0% and reducing the year-to-date total return to 0.5%, according to a report published by Nomura. This decline is attributed to stalled

US Excessive Yield Bonds Face Headwinds as Inflation Stalls: Nomura Experiences

To obtain market updates in your inbox, subscribe to the publication Global Macro Playbook.

US excessive yield bonds edged decrease in April, with the ICE BofA US Excessive Yield Constrained Index (HUC0) declining 1.0% and decreasing the year-to-date whole return to 0.5%, based on a report printed by Nomura. This decline is attributed to stalled progress on inflation and the following rise in Treasury yields.

Nomura’s report highlights that whereas the US noticed disinflation within the latter half of 2023, the Core PCE index has returned to a 4% annualized charge in Q1 2024, indicating that inflation stays persistent. This has led to a “larger for longer” expectation for rates of interest, because the Federal Reserve is unlikely to chop charges till inflation subsides.

The rise in Treasury yields, with the 10-year Treasury yield rising by 48 foundation factors in April, has weighed on returns for prime yield bonds. CCC-rated bonds underperformed in the course of the month, with the Cable TV sector experiencing probably the most important decline because of issuer-specific exercise.
Regardless of these challenges, the US financial system continues to exhibit regular development, with actual closing gross sales to home purchasers rising at a 2.8% annualized charge in Q1 2024. This optimistic financial outlook has helped preserve excessive yield spreads in test.

“Wanting ahead, NCRAM feels the yield and carry will drive a beautiful whole return for prime yield this yr, whereas progress on inflation can be a key driver of Fed coverage and Treasury yields,” Nomura factors out.
European Excessive Yield Reveals Resilience

Learn Extra: Treasury Signals Stable Debt Issuance, Calming Market Jitters

In distinction to the US market, European excessive yield bonds demonstrated resilience in April, with the ICE BofA European Forex Excessive Yield Constrained Index (HPC0) returning -0.02% and 1.89% year-to-date. Spreads tightened in the course of the month, pushed by BB-rated bonds, as Bund yields elevated whereas money excessive yield bonds remained comparatively secure.

The European financial system is exhibiting indicators of restoration from a interval of destructive development, and whereas inflation stays persistent, the development suggests potential for an ECB charge lower in June. Technical elements additionally stay supportive of European excessive yield, with modest new challenge exercise and ample money accessible to soak up new provide.

Advertisement. Scroll to continue reading.

“New points picked up on the finish of April as issuers pushed ahead their plans to refinance their 2025 and 2026 maturities given the wholesome capital markets,” notes Nomura.

The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.

Read More

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


You May Also Like


April 2, 2024 10:10am Las Vegas, NV SuperMotocross World Championship Final SuperMotocross World Championship The following press release is from SuperMotocross: ELLENTON, Fla ....


The 29-year-old Australian driver, who competes regularly for Tickford Racing in Supercars, has been a longtime fan of NASCAR and will make his debut...


Jake Paul believes he hits harder than Mike Tyson and plans to prove that on July 20. Paul and Tyson will fight in a...


May 15, 2024 Do you know how to influence people who don’t report to you? That might include your boss, clients, or even your...


Please enable cookies. Sorry, you have been blocked You are unable to access Why have I been blocked? This website is using a...


While Hendrick Motorsports teammates William Byron (two) and Kyle Larson have together won three of the series’ first six races, Bowman struggled with a three-race...


AUSTIN, Texas — William Byron had one of those perfect racing weekends. Fastest in practice. Fastest in the final round of qualifying. Fastest in...


Sometimes the stars align, and you just have to call it like it is. That’s what happened between the Braves and Cubs on Monday...


The increase in horsepower demand is not going away anytime soon. NASCAR rolled out its new short-track package, which in theory would allow drivers...


Tyler Conway @@jtylerconway Featured Columnist IV May 13, 2024 Issac Baldizon/NBAE via Getty Images The Chicago Bulls are reportedly expected to re-sign DeMar DeRozan...


For the longest time in baseball we have had some of the most detailed pitching metrics thanks to Major League Baseball’s Statcast technology, but...




Decorated college basketball coach John Calipari is leaving the University of Kentucky to take a job with the University of Arkansas, news outlets reported...