The average yield for the Bloomberg Barclays US corporate high yield index tanked by 45 basis points to a record low of 4.56% on Monday as coronavirus vaccine hopes boosted risk appetite and demand for riskier companies.
Monday’s slide was the biggest single-day decline since April 9, when the Federal Reserve expanded its corporate bond purchases to include some junk debt, according to Bloomberg. The previous record low of 4.83% was set in June 2014.
While the junk bond yield reached record lows, the yield on the 10-year Treasury yield jumped over 10 basis points to 0.97%, the highest since March 20. Further, the yield curve reached its steepest level since March. The data indicates investors rotated money out of safe havens and into risk assets.
The investor sentiment was buoyed by reports that a large-scale study for a coronavirus vaccine developed by Pfizer Inc. and BioNTech SE prevented over 90% of infections.