Morning Commentary: Junk opens unchanged ahead of the Fed; big ETF outflows continue

By Paul A. Harris

Portland, Ore., Feb. 22 – The high-yield bond market opened unchanged on muted volume as investors await the 2 p.m. ET release of minutes from the latest Fed meeting to parse for indications on the central bank’s inflation fighting strategy, a trader said.

With the major U.S. stock indexes mixed and mostly flat at mid-morning, the iShares iBoxx $ High Yield Corporate Bd (HYG) share price was up 0.44%, or 32 cents, at $73.74.

The Hanesbrands Inc. 9% senior notes due February 2031 (B1/BB-) were slightly better on the morning at par ½ bid, 101 offered, the trader said.

They changed hands late Tuesday at par ¼.

The $600 million blowout deal priced at par on Feb. 10, the most recent session to see any action whatsoever in the dollar-denominated new issue market.

The primary market remained quiet on Wednesday morning.

ETF outflows continue

High-yield ETFs sustained $1.2 billion of daily cash outflows on Tuesday, according to a market sources.

Those ETF outflows follow last Friday's $1 billion outflow and last Thursday's $2.29 billion outflow, the source recounted.

Meanwhile the actively managed high-yield funds sustained $16 million of daily outflows on Tuesday.

The combined funds are tracking a whopping $4.9 billion of net outflows for the week that will conclude with Wednesday’s close, which would be the biggest weekly outflows from the asset class since last August, according to the market source.

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