High yield bonds (funded by multiple rounds of QE) will definitely put pressure on the global financial system this year. I believe over $1 trillion of QE went into energy related bonds (in US and Europe), and nobody had thought of $30 oil plus strong US Dollar. Euro and Rupee/INR will be at risk from a stubbornly strong US Dollar. Zero debt companies with substantial earnings in USD like Google, Infosys, McDonalds maybe the safest places in market in 2016. Stay long on USD. Energy and Materials stocks should be handled only by advanced traders. There maybe many sharp corrections and short-covering rallies.

Spreads in the high-yield market have reached levels of 650 to 700 basis points. This is historical territory, because there have only been 5 instances where the spreads in the high-yield market have reached levels of 650 to 700 basis points, and in 3 of those instances they moved wider to 900 to 1000 basis points within a couple of months. Therefore, Analysts feel High Yield Bond Market needs a bounce back to take place soon and to be real (with diverse investors buying into them for value), with legs to support it, or else its prospects begin to dim fast from here.

Here is Deutsche Bank view:
It (the bounce back) must be organic in its nature for it to survive beyond a few weeks, i.e. it must grow out of a meaningful proportion of investors changing their core assessment of downside risks in China, the rest of EM, and global macro picture. Another fire being put out by yet another extraordinary action from PBOC (Peoples Bank of China), even if it looks risk-friendly at a first glance would be an example of the opposite. The market needs to see a cessation of fires that require PBOC’s constant attention for such a turn in investor sentiment to take hold longer term, beyond the next few weeks.

Reference:
http://finance.yahoo.com/news/bond-market-going-ugly-isnt-205103689.html