F. Scott Fitzgerald wrote, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” For observers of the capital markets, this quote is especially apt.

Today’s cross-currents are bewildering. Unemployment is up, yet the number of people finding jobs is also up. The economy is strong, yet recession worries persist. The Fed has thrown in the towel on rate hikes for the foreseeable future, yet some predict at least one more this year.

Through mid-January, junk bonds endured 40-plus days of zero issuance – the longest dry spell in over a decade. The media had fixed income dead and buried.

Yet three weeks ago, the primary flow spigot opened wide, particularly for secured instruments. As loan pants have lost their crease, thanks to continued fund outflows, recognized names such as Dun & Bradstreet and Commscope shifted more of their debt structures to bonds. TransDigm elected to go exclusively with junk.