High Yield to Benefit from Weak Jobs Number, Draghi's Bond-Buying

The disappointing August jobs report may be troublesome for the economy, but it is positive for high yield investors, said Brian Kloss, portfolio manager for the Legg Mason Brandywine Global High Yield Fund. Kloss said the report gives Federal Reserve Chair Janet Yellen the ability to suppress rates longer, thereby increasing the demand for high yield bonds. Similarly, he said ECB President Mario Draghi's move to institute a quantitative easing program will also benefit high yield bonds because it will compress spreads as he jump starts the credit markets in Europe. Finally, Kloss said the quality of European high yield new issuance is high, even while it is deteriorating in the US as supply increases.