By John Tierney 01-04-2021
In: hive-exclusives | Credit

High-Yield Credit Is Still a Buy

(2 min read)
Resize text:

Amid the volatility and uncertainty sparked by a jump in the 10-year Treasury yield, equities and corporate credit markets hit turbulence in recent weeks (Chart 1). The surprise was that the high-yield market was so muted. Both investment-grade and high-yield spreads traded in a 15bp range – something quite unusual when volatility hits. The difference is that investment-grade spreads are near the wides of 2021, and high yield has recovered to the year’s tights. We see this robust performance indicating strong underlying fundamentals.

Still, we favour high-yield over investment-grade credit at this juncture. As long as markets are concerned about higher inflation and further increases in Treasury yields, investment grade will struggle to recover. The investment-grade sector has duration risk similar to the 10-year Treasury note; if Treasury rates rise further, investment-grade total returns will be hit even if credit spreads are little changed.


£39/month thereafter

For access to our Slack Chat Room, where we discuss all things markets with our researchers and subscribers



ECB Preview: Biding Time Until June (2 min read)

By Caroline Grady | Apr 20, 2021
Stepped up PEPP purchases since the 11 March ECB meeting leave little need for any policy changes at this week’s governing council meeting...

Russia Sanctions: The Shock That Never Came (5 min read)

By Tatiana Orlova | Apr 16, 2021
The most important measure bars US entities from newly issued local sovereign debt, effective from 14 June. The ban includes debt issued by the CBR...

Weekly Vaccination Update: J&J Pause and EU Supply Schedule (1 min read)

By Sam van de Schootbrugge | Apr 14, 2021
In this prime tracker, we review the latest vaccine developments globally. This week, we’ve added some brief commentary...


ECB Preview: Biding Time Until June (2 min read)

By Caroline Grady | Apr 20, 2021
Summary Thursday’s ECB meeting is unlikely to…

Five Things You Did Not Know About China (2 min read)

By Bilal Hafeez | Apr 13, 2021
China is a global economic superpower, yet…

Want To Join Our Community Of Leading Investors And Researchers In Our Slack Chat Room?