Morning Commentary: Junk opens unchanged amid thinning liquidity ahead of holidays

By Paul A. Harris

Portland, Ore., Dec. 23 – The high-yield bond market opened unchanged on Friday as the ranks of market participants continued to thin ahead of Friday's early close in the bond market, according to a sellside source.

With the S&P 500 stock index up 0.23% at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was essentially flat, down 0.05%, or 4 cents, at $74.16.

In Europe, the closely followed iTraxx Crossover index, comprised of the 75 most liquid sub-investment-grade euro-denominated entities, was 1.5 basis points tighter at 483 bps bid, according to a market source there, who commented that trading activity in high-yield bonds was very light.

The primary market was idle ahead of the early close and is expected to remain so until the new year, sources say.

As reported, the dedicated high-yield mutual funds sustained $3.5 billion of net weekly outflows in the week to the Wednesday, Dec. 21 close, according to a Thursday afternoon report from fund-tracker Refinitiv Lipper.

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