High-Yield Bonds Rally Because Oil Drillers Might Catch a Break

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The high-yield bond market rallied on news that oil and gas drillers—one of the largest sectors in that market—could get relief from the relentless pressure caused by a supply glut.

High-Yield Bonds Rally Because Oil Drillers Might Catch a Break

The high-yield bond market rallied on news that oil and gas drillers—one of the largest sectors in that market—could get relief from the relentless pressure caused by a supply glut.

https://twitter.com/realDonaldTrump/status/1245720677660925952 mailto:alexandra.scaggs@barrons.com High-Yield Bonds Rally Because Oil Drillers Might Catch a Break By Alexandra Scaggs Photograph by ISMAEL FRANCISCO/POOL/AFP via Getty Images President Trump said Russia and Saudi Arabia might be near a deal to cut oil production.

The high-yield bond market rallied Thursday morning on news that oil and gas drillers—one of the largest sectors in that market—could get a break from the relentless pressure on their business caused by the recent battle between the big oil-producing countries over cutting supply.

The iShares iBoxx $ High Yield Corporate Bond ETF (HYG) was up 1.2% around 11 a.m. Eastern time. The SPDR Bloomberg Barclays High Yield Bond ETF (JNK) was also up around 1.2%.

The gains followed a tweet from President Donald Trump that said Russia and Saudi Arabia might be near a deal to cut production by 10 million to 15 million barrels. The S&P 500 was up 1.4% and oil jumped more than 30%.

As of Wednesday’s close, bonds issued by energy companies made up about 8.9% of the $1.1 trillion ICE BofA High Yield Bond Index, the fourth-largest sector.

A year ago, energy bonds were the market’s largest sector by far, and made up about 15% of the index.

Write to Alexandra Scaggs at alexandra.scaggs@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.