New record low for high-yield, but spreads could still come in

|By:, SA News Editor

At just 4.94%, the yield on the BAML U.S. high-yield index slipped below its record-low level set 13 months ago, Maybe more importantly, underlying Treasury yields are about 75 basis points higher today than they were when the record was set in May 2013, meaning spreads are way narrower today - just 3.43% vs. 4.23% last year.

The all-time low spread of 2.4% was set in June 2007, meaning there's plenty of room for junk yields to fall further as long as there's no upset in the Treasury market.

Junk bonds have now gained 5.36% YTD, not bad for a class yielding just 5.67% at the start of 2014.

ETFs: HYG, JNK, HYLD, SJB, HYHG, ANGL, HYLS, UJB, XOVR, THHY, QLTC, HYGH