The stock market has been absolutely killed lately, but you wouldn’t know it from looking at bonds. Several high yield indexes have barely budged, despite the big worries over inflation and rates. Why? Aside from some high yield bond mechanics which make them less rate-sensitive, the answer is that investors are very excited about the sector. The market is anticipating a big wave of credit upgrades in the next year, and all investors in the space are trying to buy up the winners (who will jump in value when upgraded).
FINSUM: Earnings are doing well and there is a lot of investor demand for new high yield debt. Junk bonds look like they have a great runway for the rest of the year.