The Federal Reserve finally deemed the U.S. economy stable enough to raise interest rates this week, while volatility in the high-yield bond market appears anything but stable. Selloffs in the high yield market are typically bad for equities, and for now, the high-yield market remains firmly in a downtrend.

Regression

While the selloff in the high-yield market is certainly not good for investors, Goldman Sachs analyst John Marshall pointed out that the decline could simply be a regression following a long period of high-yield outperformance. According to Marshall, the 0.8 percent widening in the CDX HY 5Y in recent weeks is more than explained by the 25 percent decline in their corresponding equities in the past eight months.

El-Erian Weighs In

According to Mohamed El-Erian, the volatility in the high-yield bond market should serve…

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