Defying expectations Defying expectations\images\insights\video\island-peak-trekking-small.jpg January 11 2024 January 11 2024

Defying expectations

 The high-yield market saw a strong 2023.

Published January 11 2024
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Video Transcript
Question: What were the key moments in high yield in 2023?
Mark Durbiano: High yield actually had a very strong 2023. Both the returns for high-yield bonds and leverage loans are pushing into the double-digit range, and that was, quite frankly, much stronger than we thought they would be when the year started. We had thought the economy would be a little weaker, but the economy has turned out to be very resilient here in 2023. Really supported by a strong consumer. Employment has been very strong, and the consumer has shown a tremendous willingness to spend money on experiences which has really helped the service side of the economy. So while we thought the economy was going to weaken into 2023, it's actually been very strong and resilient and that's generated very strong returns. Couple speed bumps along the way. Back when the mini banking crisis happened in March, we saw spreads widen pretty aggressively. And then again, when the equity markets weakened in October, we also saw spreads widen pretty aggressively. But those tended to be very short-lived, and the market rallied back very strongly. Now, default rates have increased a bit here in 2023, but not to any great extent that negatively impacted the overall market.
Tags Fixed Income . Markets/Economy .

Views are as of the date above and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector.

Past performance is no guarantee of future results.

High-yield, lower-rated securities generally entail greater market, credit/default and liquidity risks, and may be more volatile than investment grade securities.

Issued and approved by Federated Investment Management Company