June 2024: Outlook and Implementation
► The U.S. high yield market continued to rally with a gain of 0.94% due to favorable economic data and strong technicals.
► May inflation data surprised to the downside, which revitalized the prospects for earlier rate cuts and contributed to lower U.S. Treasury yields, with 5-year and 10-year U.S. Treasuries lower by 13 basis points (bps) and 10 bps, respectively.
► Additionally, economic data pointed to a slowing, but resilient economy. Fund flows remained supportive in response to the macro data and the relatively high yields.
► Higher-quality credits continued to outperform with the rally in rates as BB, B, and CCC credits gained 1.05%, 0.96%, and 0.55%, respectively.
► Spreads widened 1 basis point to 309 bps and excess returns were 0.13%. The yield-to-worst (YTW) decreased from 8% at the end of May to 7.9% at the end of June.