In September, the U.S. Federal Reserve raised rates for the first time since July 2023.
The FOMC lifted the federal fun | Hanami
In September, the U.S. Federal Reserve raised rates for the first time since July 2023.
The FOMC lifted the federal funds target by 25 basis points to 3.75% to 4%, in a 12-0 vote. The statement's reasoning was brief: inflation remains elevated.
Long rates moved further. The 10-year Treasury yield went from 5.01% on the day of the decision to ~5.20% today.
High yield credit repriced alongside. Over the same stretch, the ICE BofA US High Yield Index spread over Treasuries widened from 2.70% to 3.11%, and the index's effective yield climbed from 7.53% to 8.09%.
For new capital, that is a different starting point. MacKay Shields puts the index's post-2009 average yield at about 6.5%. The latest reading sits well above it.
A repricing like this rarely hits every issuer equally. Some companies refinance comfortably at higher rates and some struggle, so issuer selection carries more weight than it does in a calm market.
That is where active management earns its keep in high yield, and it is the exposure HYB brings onchain: a high-yield corporate bond portfolio managed by @NYLIManagement, available as a token across multiple networks.