BAML: Bullish High Yield Thesis Rests On Three Pillars Which Are Teetering

2017 is not likely to be a good year for high yield investment performance, Bank of America Merrill Lynch notes. In particular, cracks are appearing in the bullish thesis that had been playing out all year. Of the three pillars upon which the high yield thesis rests, it is one performance driver that could most upset performance expectations.

Cracks might appear in high yield thesis

With the US Federal Reserve eying a December rate cut, investors in both stocks and bonds have begun to express nervousness to various degrees. From September 29, when the US Ten Year Note was yielding 1.55%, rates have climbed to 1.78% today. Stocks, meanwhile, continue...