CAM High Yield Weekly Insights

(Bloomberg)  High Yield Market Highlights

• US junk bonds stalled and momentum faltered on skepticism that a peace deal between the US and Iran is likely after reports of a US attack on an Iranian oil tanker, which pushed oil prices higher again.
• Meanwhile, the primary market shrugged off these developments and continued to see a wave of new supply. Eight deals for more than $5b priced Thursday, driving the week’s tally to nearly $12b, the busiest since mid-April even without any data-center linked issuance.
• Eighteen deals priced this week, the most borrowers in a week since September last year
• The new issues performed well in the secondary market against the backdrop of rising oil prices and geopolitical conflict

(Bloomberg)  US Consumer Sentiment Declines to Record Low on Inflation Angst

• US consumer sentiment fell in recent weeks to a fresh record low on concerns about the impact of inflation on personal finances and buying conditions.
• The preliminary May sentiment index decreased to 48.2 from 49.8 in April, according to the University of Michigan. The survey period includes responses from April 21 to May 4.
• Consumers expect prices to rise at an annual rate of 4.5% over the next year, down slightly from a month earlier, data Friday showed. They saw costs rising at an annual rate of 3.4% over the next five to 10 years.
• Confidence continues to languish as Americans’ anxiety about the overall cost of living is compounded by sharply higher prices at the gas pump. The strain on household budgets poses a risk to consumer spending, a primary engine for the economy.
• Gasoline prices breached $4.50 a gallon on average this week for the first time since July 2022, American Automobile Association data show. They’re up more than 50% since the start of the Iran war.
• The report showed “about one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs,’’ Joanne Hsu, director of the survey, said in a statement. “Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump.”
• The current conditions gauge dropped to 47.8, the lowest on record. The expectations index rose for the first time since January.
• Consumers’ perceptions of their current financial situation slid to the lowest level since 2009. Buying conditions dropped to a five-month low.
• Meanwhile, the government’s April employment report showed employers added more jobs than expected for a second month. Nonfarm payrolls rose 115,000 last month after an even bigger surge in March, marking the strongest two-month increase since 2024.
• earlier, data Friday showed. They saw costs rising at an annual rate of 3.4% over the next five to 10 years.
• Confidence continues to languish as Americans’ anxiety about the overall cost of living is compounded by sharply higher prices at the gas pump. The strain on household budgets poses a risk to consumer spending, a primary engine for the economy.
• Gasoline prices breached $4.50 a gallon on average this week for the first time since July 2022, American Automobile Association data show. They’re up more than 50% since the start of the Iran war.
• The report showed “about one-third of consumers spontaneously mentioned gasoline prices and about 30% mentioned tariffs,’’ Joanne Hsu, director of the survey, said in a statement. “Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump.”
• The current conditions gauge dropped to 47.8, the lowest on record. The expectations index rose for the first time since January.
• Consumers’ perceptions of their current financial situation slid to the lowest level since 2009. Buying conditions dropped to a five-month low.
• Meanwhile, the government’s April employment report showed employers added more jobs than expected for a second month. Nonfarm payrolls rose 115,000 last month after an even bigger surge in March, marking the strongest two-month increase since 2024.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.