US High Yield (HY) bond funds saw its biggest inflows since April 7, 2021, receiving $2.3bn in cash in the week ending October 20 as per Refinitiv. The inflows show a reversal in risk appetite as it comes on the back of two consecutive weeks of outflows including a $1.8bn withdrawal last week, the most since June. Bloomberg notes that the jump in yields by ~30bp since September and the rally in equities were also helping drive demand. “The value of the equity cushion is so high compared to the level of debt…Rates have been increasing since September, leading to losses for investment-grade. That’s also made junk bonds more attractive”, said Bill Zox, HY portfolio manager at Brandywine Global Investment Management.

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