The interest rate cut signal ignites the junk bond market! The yield on U.S. high-yield bonds falls to a 40-month low

The yield on the U.S. junk bond market fell to a 40-month low last Friday, with bond prices experiencing the largest single-day increase in nearly three months. Federal Reserve Chairman Jerome Powell signaled a potential interest rate cut, shifting market focus to a slowdown in the labor market. The yield on BB-rated high-yield bonds dropped to 5.80%, while the yield on CCC-rated bonds fell to 10.58%. The expectation of interest rate cuts reduces the default risk premium, driving funds into high-risk, high-yield areas. JP Morgan predicts that high-yield bond supply will be raised from $225 billion to $300 billion in 2025, indicating optimistic market financing demand