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Weekly Market Summary

Mar 18 to Mar 22, 2024

View Current Performance

Extra Credit*

  • The Federal Reserve recently released its Z1 data series (known as the flow of funds) for 4Q23, which shed light on fixed-income supply and demand dynamics for the quarter. On the supply side, issuance rose, driven by corporates and U.S. Treasuries. While Treasury-Bill (T-bill) issuance fell versus the previous quarter, there were still over $400 billion of T-bills supplied on net in Q4. On the demand side, households and foreign investors stepped up, while banks remained on the sidelines.
  • Treasury issuance, excluding T-bills, was about $175 billion in Q4, up by over $100 billion from Q3. On the surface, this appears low, given the wide budget deficit, but much of the issuance in 2023 has come from bills, which was over $400 billion in Q4.
  • Net agency issuance turned positive, and both corporate-bond and municipal-bond issuance rose. Corporate-bond issuance rose nearly $200 billion for the quarter.
  • Overall, net issuance of fixed-income securities to investors (excluding bills and Fed) was about $614 billion in Q4, up from about $220 billion in Q3.
  • Global-loan forward calendars are starting to pick up, which could mean more loans for Collateralized Loan Obligations (CLOs) to buy. Dealers continued to net add U.S. non-investment-grade CLO risk over the past few weeks, as they have been doing since late summer 2023. The outstanding size of the U.S. loan market has been shrinking this year and has been range bound in Europe, but global-loan forward calendars are starting to pick up, which has potential to change this dynamic.
  • Bank-loan and high-yield bond default rates, excluding distressed exchanges, finished February at 1.77% and 1.66%, respectively, down from 1.95% and 2.04% in January. The 25-year historical default rate for loans and high-yield bonds is 3.00% and 3.40%, respectively.

Sources: Bloomberg and JP Morgan as of 3/18/24.

Yield as of:
Mar 22, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
Prior Week
Start of the Year
Option Adjusted Spread as of:
Mar 22, 2023
High-Yield Bonds
Investment-Grade Corporates
Last Week
296 bps
483 bps
83 bps
Prior Week
302 bps
480 bps
84 bps
Start of the Year
323 bps
501 bps
93 bps
Prices as of:
Mar 22, 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.

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