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Weekly Market Summary

Sep 11 to Sep 15, 2023

View Current Performance

Extra Credit*

  • In the near term, the widely held view of an imminent economic slowdown along with persistently large budget deficits remain headwinds for investors.  
  • While yields historically have fallen following the last hike of a Federal Reserve rate-hiking cycle, current economic conditions are not as favorable as in the past, and the ending of the hiking cycle alone may not bring down rates.
  • Investors have been closely watching potential changes in monetary policy in Japan for spillover to the global bond markets. There is likely to be some upward pressure on global bond yields from developments in Japan. However, it may be limited, which would leave yields range bound. Far forward rates in Japan have already risen sharply, and continued sales of FX-hedged bonds should not come as a surprise. A material shift in the long-term inflation outlook remains a risk, though, going forward.
  • After a summer of quiet issuance and broad strength in spreads, a pickup in supply is expected to hit the high yield and loan markets this month. This should at least partially ease the technical factors that have been keeping spreads grinding tighter and give both markets some breathing room. 
  • The trailing 12-month default rates for bank loans and high-yield bonds, excluding distressed exchanges, finished the month at 2.24% and 1.29%, respectively, down from 2.33% and 1.18% from July. 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 9/11/23.

Yield as of:
Sep 15, 2023
High-Yield Bonds
Bank-Loans
Investment-Grade Corporates
Last Week
8.53%
10.73%
5.73%
Prior Week
8.54%
10.83%
5.68%
Start of the Year
8.96%
10.69%
5.34%
Option Adjusted Spread as of:
Sep 15, 2023
High-Yield Bonds
Bank-Loans
Investment-Grade Corporates
Last Week
374 bps
507 bps
110 bps
Prior Week
376 bps
516 bps
111 bps
Start of the Year
469 bps
592 bps
121 bps
Prices as of:
Sep 15, 2023
High-Yield Bonds
Bank-Loans
Investment-Grade Corporates
Last Week
$89.26
$95.21
$88.82
Prior Week
$89.13
$94.90
$89.05
Start of the Year
$86.22
$91.89
$89.37

*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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