HY Market Weekly Minutes: Rally Mode Continues As Tariff Reprieve Fuels Market Surge (May 19, 2025)
A Brief Recap of Last Week's High Yield Market Performance
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Well, that escalated quickly.
Just weeks after investors were fleeing high yield in droves, the market surged +0.87% for its fifth consecutive weekly gain as the U.S.-China tariff cease-fire turned doomsday predictions into distant memories. The 90-day agreement to lower tariffs has completely reset market psychology; the question now isn’t whether to buy, but whether you can still get in before the train leaves the station.
The numbers are quite telling. Index yields dropped 28bps to 7.46% while spreads compressed 38bps to 305bps. Meanwhile, the S&P went ballistic with a 5.3% weekly jump, the VIX plunged below 20, and tech names skyrocketed with NVDA 0.00%↑ surging 15%+ in just five days. Forget a relief rally, this is starting to look like a FOMO-fueled sprint to new highs.
But here’s what’s interesting: fund flows made a massive positive swing with $2+ billion pouring into high yield for the third consecutive weekly inflow, bringing the three-week total to ~$7 billion. That’s not just impressive, it’s the largest three-week influx since November 2023 and a complete reversal from the $13+ billion in outflows during April’s panic.
The primary market didn’t also just reopen, it exploded. Eleven deals totaling over $11 billion priced last week, the second-largest weekly volume of 2025. With Thursday’s PMI data and the Memorial Day slowdown as the only speed bumps ahead, the rally train shows few signs of slowing down.
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