Login / Register
Contact Us
View Performance
Fixed Income
U.S. Equity
International & Global Equity
Chart Library
Market & Economic Commentary
Fund Literature
Prospectuses & Reports
Fact Sheets
Client Guides
Fund Literature
Advisor Resources
Advisor Materials
View Resources
Tax Information
Corporate Credit Highlights
Glossary of Terms

Weekly Market Summary

Aug 14 to Aug 18, 2023

View Current Performance

Extra Credit*

  • Following June’s trends, inflation and wage data last month came in soft, reinforcing market hopes of a soft landing without additional hikes by the Federal Reserve’s Federal Open Market Committee (FOMC). While this may be welcome news for markets — and potentially buys time for the Fed to pause in September — the committee may be skeptical that recent disinflationary pressures will persist and push inflation to the committee’s 2% target.
  • CPI (Consumer Price Index) inflation came in soft for the headline (0.17% month-over-month and 3.2% year-over-year) and core (0.16% month-over-month and 4.7% year-over-year), reflecting carryover pressures from June, as further declines in airfares, used cars, and lodging led to the softer print. The latest Atlanta Fed wage-growth tracker shows June's deceleration was sustained into July, bolstering evidence that underlying wage pressures   have continued to somewhat soften. While the market embraced this news, the FOMC is likely to remain more circumspect than markets about the sustainability of disinflation amid tight labor markets, with core Personal Consumption Expenditures Price Index (PCE) looking to run firmer than the CPI measure.
  • The credit risk premium reached a new low for this cycle but may stay low for a while since front-end Treasury rates are likely to remain elevated for some time. This could potentially lead to credit risk premiums to remain low due to higher front-end rates vs. buying pressure. Spread as a percentage of yield for the U.S. investment-grade index (represented by the Bloomberg US Credit Index) hit 21% last week and has bounced slightly this week, with yields lower and spreads wider. This was the lowest level since August 2007. Since 2010, in the post-Global Financial Crisis era, this relative premium has averaged 42%, but Treasury yields were historically low, and in almost any scenario, this metric was going to decline as yields went higher. So, while this indicates relatively low compensation for credit risk, this metric can stay low for long periods of time and does not necessarily quickly mean revert. In fact, for most of 2004-07, the percent pickup remained below current levels, averaging 18.5% when Treasury yields were at similar levels.
  • The trailing 12-month default rates for bank loans and high-yield bonds, excluding distressed exchanges, finished the month at 2.33% and 1.18%, respectively, down from 2.41% and 1.64% from June. The long-term historical default rate for loans and high-yield bonds is 3.1% and 3.2%, respectively.

Sources: Bloomberg and JP Morgan as of 8/14/23.

Yield as of:
Aug 18, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year
Option Adjusted Spread as of:
Aug 18, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
392 bps
533 bps
114 bps
Prior Week
373 bps
535 bps
111 bps
Start of the Year
469 bps
592 bps
121 bps
Prices as of:
Aug 18, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year

*Source: Morningstar®, Bloomberg, Credit Suisse. OAS is Options Adjusted Spread. 4-year discount margin is used for spread for bank loans. Yield quoted is yield-to-worst or equivalent calculation. YTD Low / High for yields are based on end of week and not intraday movements. Indexes and sub-indexes: Investment-grade corporates represented by Bloomberg US Corporate Bond Index. High-yield bonds represented by Bloomberg US Corporate High Yield Index. Bank loans represented by Credit Suisse Leverage Loan Index. The red and green arrows depicted under Yields, Option Adjusted Spreads, and Prices indicate a higher or lower value from the previous week.

Past performance does not guarantee future results. Index performance is not indicative of fund performance. Indexes are unmanaged and it is not possible to invest directly in an index.

Any discussion of individual companies is not intended as recommendation to buy, hold or sell securities issued by those companies. Aristotle Fund holdings can be found on the fund pages linked above.

Investors should consider a fund’s investment goal, risks, charges, and expenses carefully before investing. The prospectus and/or the applicable summary prospectus contain this and other information about the Fund and are available from AristotleFunds.com. The prospectus and/or summary prospectus should be read carefully before investing.

Investing involves risk. Principal loss is possible.

Foreside Financial Services, LLC, distributor.

Scroll horizontally to view tables
Please Upgrade Your Browser.

Unfortunately, Internet Explorer is an outdated browser and we do not support it. To have the best browsing experience, please upgrade to Google Chrome, Firefox or Safari.