May’s inflows into US high yield bond funds was $5bn (LSEG Lipper data).

Investors are positioning themselves for lower rates and a more positive economic outlook.

With a better economy, stress on high yield issuers would be lower.

US high yield bond currently pay around 3% over treasuries (ICE BofA global high yield bond index).

Whether this yield spread is enough to cover for the higher risk of default is unknown. These spreads are close to all time lows, at a time with still a lot of uncertainty – and some scenarios which could be very negative.

If we start to get negative economic, inflation or geopolitical data, this could move against investors quickly.

For issuers, this could be an excellent opportunity to lock in their borrowing needs for the next 24 months.