High Yield Bonds: The Quiet Winner in a Noisy Market

Nuveen argues that while investors focus on equities and geopolitics, U.S. high yield credit offers an overlooked mix of income, improving quality, and limited AI disruption risk. 

• U.S. high yield returned +1.30% YTD through 21 April, outperforming the Aggregate Bond Index by 82 bps.
• BB-rated bonds now make up roughly 57% of the market, versus 38% before the financial crisis.
• Net leverage ratios are healthier than in private debt markets.
• High yield has less than 5% exposure to software, while holding more exposure to AI beneficiaries such as fiber, power, and data centers.

In a world of expensive equities and stubborn yields, junk bonds may no longer deserve the old label.