Investors may increase holdings of high-yield bonds in anticipation of resolution to tariff negotiations

As President Trump’s tariff pause ends, bond investors may add high-yield bonds to portfolios. Credit market shops won’t panic-sell, expecting a resolution to tariff negotiations. High-yield spreads widened post-tariffs but have since retraced. A deal for lower tariffs on Vietnamese exports boosts expectations. More high-yield bonds now secured by collateral, reducing default risk. Investors find junk bond yields compensating for risk, creating a supply-demand imbalance. High-yield funds saw outflows post-tariffs but have since reversed. Supply of new junk bonds not keeping up with demand, potentially leading to tighter spreads.

Read more at Yahoo Finance: Analysis-Investors to double down on US junk bonds on another tariff tantrum