Weekly Market Summary

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• High yield issuance was slow to pick up following Memorial Day, with pro forma volume for the week at $2.2 billion across four tranches. Despite the modest weekly activity, May volume is on track to top $30 billion, the largest monthly total since September.
• According to MorningStar’s outlook on the neutral rate of interest, the Federal Reserve may need to cut rates over time to avoid a potential recession, However, they note that the pace of any cuts will likely be measured due to ongoing uncertainties, particularly around entrenched inflation. Based on this outlook, MorningStar expects the 10-year Treasury yield to decline to 3.25% by 2027.
• Investor appetite rebounds: The loan market saw sentiment shift as retail redemptions ceased in mid-May, breaking a 10-week outflow streak. Concurrently, BSL CLO issuance surged to its highest level in six months, signaling a broad-based revival in demand.
• In May, loans gained 1.55%, the best performance in 17 months, bringing the year-to-date return to 1.99%.  The share of loans priced at par or higher increased to 27%, from just 4% at the end of April, as the first post-Liberation Day repricing emerged. Secondary prices for leveraged loans have rebounded to levels last seen before the April 2 tariff announcement. As of May 31, the weighted average bid of the index had climbed to 96.70 — up 229 basis points from the April 9 low and 39 basis points above the final March reading.

Sources: Bloomberg and JP Morgan as of 6/8/25.