Happy Anniversary, High Yield and Oil

Oil has rallied 105.8% since February 2016, powering high yield to a 25.9%
return over the same period, based on the Bloomberg Barclays High-Yield Index,
outperforming the broad Bloomberg Barclays Aggregate Bond Index by over
25%. On February 11, 2016, the price of oil bottomed at $26/barrel, leading the
average spread of high yield over comparable Treasuries to increase to 8.4%, the
widest level since 2011. That spread has decreased over the last year to 3.8%
as of February 10, 2017, as defaults in the energy sector have largely come and
gone. The current spread level is approaching the post-recession low of 3.2% hit
during late-June 2014, when oil was trading at over $105/barrel [Figure 1].