The short -term High Yield offers a long -term return of around 5% per year on July 18.
Since the beginning of the year, the ECB has dropped its guiding rates on four times, bringing its deposit rate to 2%, against 3% at the end of 2024. The StR € rate, reference of the monetary market, has returned to 1.9% and could continue its withdrawal: the market anticipates a last drop in the ECB by the end of the year.
In parallel, other moderate risk solutions retain consistent yields on the rate markets. The short-term high yield (Ice Bof A 1-3 Year Euro High Yield ConstRained Index) offers, for example, a long-term return of around 5% per year on July 18. This rate differential allowed the index, over the long period, to accumulate solid outperformance against the monetary.
Our analysis
The volatility of the short term high yield is of course higher than that of the money market. It is also higher than that of the short -term grade segment. However, it remains more moderate than that of the High Yield market “all maturity combined”, and therefore constitutes a limited risk approach on the rate markets, associated with term yields currently much higher than inflation.
It should also be noted that since 2007, the folds observed in this market segment, corresponding to periods of stress on the markets (2008, 2011, 2020 and 2022), have almost always been filled in the space of only one year.
