Fixed Income

May 15, 2017

High-yield fixed income instruments were in demand last week on global markets, boosting quotes for Ukrainian sovereign debt, which is still traded below its par value. In Europe, yields on some junk-rated bonds hit their lowest level on record. US high-yield securities were also outperforming other bonds, with yields falling toward lows last reached in mid-2014. High-yielding debt has been running against the current of the so-called “reflation” trade since November, when expectations of higher-inflation, higher-growth policies from the incoming Trump administration in the US triggered a selloff in many bonds. In Ukraine-related news, US President Trump made a generalized statement calling for peace between Ukraine and Russia after meeting separately with the foreign ministers of the two countries in Washington on Wednesday (May 10). Whether this is a signal that the US might take a more active role in the implementation of the Minsk peace agreement is anyone’s guess, as the Trump adm