Outlook for the week
We view high yield bonds as more favourable given historically cheap valuations (Figure 3) and higher buffers against rising interest rates.
Key economic releases for the week
Last Week Summary
The 10yr treasury yield spiked to a high of 1.68% on Wednesday on the back of better than expected jobless claims, before settling down at 1.63%. However, new issue activity in Asia was heavily subdued, with the number of deals printed down 67% WoW. The weekly volume printed also dropped significantly by US$5.78bn to US$2.018bn. With a quiet market, average initial price guidance tightening decreased significantly as well, falling 15.8bps to 18.9bps. US$2.018bn of bonds was issued from 7 deals. Breakdown: Investment Grade: US$1.416bn, High Yield: US$322mn, Non-Rated: US$280mn.