Summary
- With the high-yield market trading at decade low spread levels, tariff uncertainty caused sentiment to change dramatically and spreads to widen ninety basis points from the low levels reached in January.
- Being underweight the CCC-rated and distressed segment was the largest contributor to Thrivent High Yield Fund’s outperformance for the first quarter of 2025.
- We are cautious about the outlook for the high-yield market until we have more clarity on what the tariff impact will be on the economy and inflation expectations.
Performance factors
Tariffs took the spotlight during the first quarter creating significant uncertainty regarding inflation prospects and economic growth. This uncertainty led spreads (the additional yield over risk-free Treasuries) to increase sixty basis points during the quarter and ninety basis points
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