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Credit Insights

Largely Uneventful Week in Corporate Bond Market

U.S. employment report just right: not too hot, not too cold.

Last week was largely uneventful in the corporate bond market. No major surprises came out of earnings reports, and while the amount of new issues brought to market was full, it was not excessively large. Credit spreads in the corporate bond market ended the week unchanged from the prior week. The average spread of the Morningstar Corporate Bond Index, our proxy for the investment-grade market, ended Friday at +132, and in the high-yield market, the Bank of America Merrill Lynch High Yield Index ended the week at +453. Fund flows for high-yield open-end mutual funds and exchange-traded funds showed a $2 billion net outflow for the week; however, our data is captured on a weekly basis through Wednesday night. Considering that U.S. equity markets spiked higher after the employment report as the risk-on mentality returned to the markets, we would not be surprised to see the outflow reverse this week.