US COTD: HY Back to UW & Sector Catalysts
Winnie Cisar - Global Head of Strategy, CreditSights
Zachary Griffiths, CFA - Head of IG & Macro Strategy, CreditSights
Logan Miller - Head of European Strategy, CreditSights
Brian Perez - Analyst, Credit Strategy, CreditSights
Kathleen Tang - Analyst, CreditSights
25 April 2025
We analyze the recent spread widening from a post-election trough on Nov 8 to peak tariff-driven volatility on April 7 across US HY sectors. We compare that to a wide range of other historical market catalysts to contextualize the recent move.
Spreads have quickly repriced off the April 7 wide as President Trump announced a 90-day pause on the reciprocal tariffs announced on Liberation Day. HY spreads have now tightened 88 bp to 373 bp as of April 24.
The robust recovery in HY spreads has been accompanied by a +2.7% total return gain, reflecting the market’s response to fiscal and monetary policy uncertainty and historically tight spread levels.
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