High Yield Spotlight

After a few weeks of turmoil around Liberation Day, junk bonds quickly regained their footing and began steadily outperforming Treasury bonds again. Junk bonds seemed to quickly mitigate any credit concerns that had been building. Are junk bonds poised to continue the trend? Macro conditions and market sentiment would seem to work in their favor. The Western Asset High Income Opportunity Fund (HIO) takes a simple approach.

Deregulation could be the one thing that keeps the economic expansion going while pulling attention away from debt, deficits and dollar signs. If Trump's goal is simply creating an economic growth tailwind, deregulation might be his best bet. That means focusing on sectors and themes that could benefit from regulation. Near the top of the list is healthcare & biotech. That’s why I think the BlackRock Health Sciences Term Trust (BMEZ) is an intriguing option.

Emerging markets bonds, which have a good chunk rated as below investment-grade, have outperformed recently. In some cases, they’ve done especially well given they’re getting the tailwind of a falling dollar as well. The Morgan Stanley Emerging Markets Debt Fund (MSD) takes a relatively straightforward approach to investing in this space and MSD has really become an income generator over the past couple of years.