July 5, 2023

Fixed Income Insights - July 2023

Monthly Report

Fed pause suggests rates near cyclical peak as relative value favors US credit

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Service sectors are stronger than manufacturing globally, and strongest in Asia, post-Covid. The Fed’s pause suggests most duration risk may be behind US Treasuries, though easing awaits lower core inflation. Gilts and JGBs underperformed on higher inflation and a weak yen. Credit outperformed, helped by yield levels.

Key highlights:

  • Macro and policy backdrop – wide dispersion in inflation and de-synchronized cycles predominate, as Fed pauses
  • Yields, curves and spreads – Structural flattening continues, US Treasuries range-trade, and credit finds sweet spot
  • Sovereign and climate bonds – Sovereign re-weighting drives WGBI spreads tighter versus climate-WGBI
  • Performance – Gilt yield spike and currency moves dominated Q2, led by weak yen and RMB. Credit outperformed

These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curves and credit spreads, across sovereign, inflation-linked and corporate indices, and FX-adjusted return performance using proprietary month-end data from our global fixed income indices.

For specialist content on a range of investment topics, including macroeconomic analysis and how it affects market performance and multi-asset analysis, viewed through our indices and data, explore our Global Investment Research hub.

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