The US High-Yield Bond Market Is Dependent On Foreign Inflows

That may not be a surprise, but here are some facts to back up the claim that the domestic high-yield bond market depends on foreign purchases.

Comparing the Credit Suisse HY index to the volume of US Corporate bond purchases from foreign funds (Ticker FORPUSCB on Bloomberg) shows that both peaked at the end of April 07, and that the CS HY index plummeted after foreign investments dropped. A revival of foreign investments this year was later followed by a nice performance of the index.



How statistically significant is the relationship? Correlation, over almost 15 years, is 93%: