Morning Commentary: High yield tumbles with global markets; oil-related bonds decline 3-5 points

By Paul A. Harris

Portland, Ore., Aug. 24 – Cash bonds were 1 to 2 points lower heading into the East Coast midday, according to a trader based in New York.

The CDX HY 24 index was a solid ¾ point lower on the day, the trader said.

The iShares iBoxx $ High Yield Corporate Bd (HYG) was down 51 cents at $84.95 per share.

The SPDR Barclays High Yield Bond ETF (JNK) was down 25 cents at $34.67 per share.

Oil takes big hit

The trader singled out energy, representing 14% of the high-yield index, as a sector that appeared to be taking a disproportionate beating on Monday.

With the barrel price of West Texas Intermediate crude down 3.9%, at $38.87 per barrel, oil-related bonds were down 3 to 5 points, the source said.

The California Resources Corp. 6% notes due November 2024, which have served as a sector benchmark since the magnitude of the crude oil crash started to become apparent in late 2014, were down 2½ points at 68 bid on Monday.

The shorter-duration California Resources 5% notes due January 2020 were 3 points lower on Monday at 74½ bid.

Meanwhile there was no news in the primary market as the week got underway.

The active forward calendar is empty and is expected to remain so until after the Sept. 7 Labor Day holiday in the United States, given the present volatility in the global capital markets, sources say.

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