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⚖️HY Option Adjusted Spreads Narrow Despite U.S. CPI Print: Cable FX Macro

  • U.S. and global high-yield corporate bond spreads have narrowed despite the hot CPI print. A measure of U.S. HY spreads is near its 52-week lows at 319bps, this is 80bps lower than the average seen over the last year

  • Monetary conditions are now extending the easing trend, a Bloomberg measure is ticking at 107.5, U.S. financial conditions have not been this loose since late 2021

  • March Fed rate cut expectations have now cancelled the possibility of a rate move but we will be attentive to Fed Chair Powell's guidance. I will be heading into the meeting expecting a hawkish stance, especially if data continues to show resilience and conditions fail to tighten



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