Senior Loan & High Yield Review - 2nd Quarter 2018
Macro Overview

Interest rates remained in an upward trajectory as the 10-year U.S. Treasury bond yield climbed from 2.74% at the end of the first quarter to 2.86% at the end of the second quarter. The yield touched 3.11% in May but retreated shortly thereafter. The interest rate volatility led to further total return declines in rate sensitive fixed income assets, with the Bloomberg Barclays US Aggregate Bond Index, a good proxy for the overall bond market, down 0.16% in the quarter and down 1.62% year-to-date. Investment grade corporate bonds fared even worse, down 0.94% in the quarter and down 3.12% year-to-date. Equity market volatility also increased in the quarter but despite this and the higher interest rates, high-yield bonds and senior loans fared well on a relative basis during the quarter. The high-yield bond index was up 1.00% in the quarter while the senior loan index was up 0.71%. Senior loans are now up 2.17% on the year, better than all other major fixed income markets, while high-yield bonds are up 0.07% (Exhibits 1 and 2).

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Posted on Friday, July 13, 2018 @ 1:14 PM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.