Skip to Content
Credit Insights

Rally Loses Steam, Credit Spreads Roll Over

Diverging global monetary policy: U.S. considers tightening whereas rest of world is easing.

Mentioned: , , ,

After tightening for the past six weeks, corporate credit spreads backed off as equity markets dropped and commodity prices fell. The average spread of the Morningstar Corporate Bond Index widened a modest 2 basis points to +158 bps over Treasuries, whereas the Bank of America Merrill Lynch High Yield Master Index was hit hard, suffering 42 bps of widening to end the week at +624 bps. After five weeks of strong inflows, high-yield mutual funds and exchange-traded funds endured $1.8 billion of outflows as investors looked to reduce exposure to high-risk assets.

David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.