Outlook for the week
We view high yield bonds as more favourable given below historical average valuations (Figure 3) providing higher buffer against rising interest rates.
Key economic releases for the week
Last Week Summary
Hawkish US Federal Reserve comments post last week’s FOMC meeting drove the US Treasury yield curve steepening, as 10yr yields rose as high as 1.59% mid week. Fed Chair Jerome Powell also signaled the scaling back of bond purchases, forecasting 2 rate hikes before end of 2023. Overnight oil futures fell as the US dollar continued to strengthen. Asian primary market sentiment was dampened by the slippage on Wall Street and Treasuries sold off. Only US$2.43bn (from 9 issuers) was issued last week, 74% WoW decline. Average initial price guidance tightening also decreased 2.6bps to 22.8bps.