High Yield Is Offering Income Few Asset Classes Can Match

Nuveen's CIO Weekly Commentary argues that while weak U.S. jobs data have reduced the importance of employment for Federal Reserve policy, attractive yields and improving fundamentals continue to support high-yield corporate bonds. 

• July's weaker-than-expected labour market report shifts investor attention toward upcoming inflation data, which Nuveen believes will be the key determinant of the Fed's September decision. 
• U.S. high-yield bonds have returned 2.29% year-to-date and currently offer a 7.4% yield to worst, levels that compare favourably with investment-grade credit and Treasuries. 
• The report argues that today's high-yield market is fundamentally stronger than in previous cycles, with higher average credit quality, lower default rates and improved liquidity, making active security selection increasingly valuable. 

Read the full report for Nuveen's latest views on inflation, Federal Reserve policy and opportunities in high-yield credit.