Favorable fundamentals should improve cash flows in select subsectors.
The next 50 basis-point move in the Treasury yield curve is likely to be a steepening.
High-yield corporate bond spreads and bank loan discount margins typically widen when the Fed is lowering interest rates.
Prepayment risk is contained for now, but the near-term technical picture remains challenging.
While the CLO market languishes amid rate uncertainty, investor demand for high-quality credit is increasing competition for whole business ABS.
A decline in institutional loan gross issuance offsets lower demand from mutual funds.
Late-cycle loan market competition is putting pressure on CMBS issuers, but opportunities remain to position defensively.
As the retail sector continues to struggle, investors compete for industrial opportunities driven by e-commerce.
Rising Treasury yields may weigh on high yield for the balance of the year, but positive returns should continue with additional spread compression and coupon clipping.
A dovish Fed, strong fundamentals, and growing demand support investment-grade corporate bond sector performance.
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