Monthly report
Dollar weakness helps drive more yield divergence
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Overview
Dollar weakness dominated returns across asset classes in Q2, and YTD, in a trend reversal of the period since Covid, allowing European central banks to ease further. Shorter Bunds and gilts led returns, with European credits also favoured. Long gilts and Treasuries stabilised in June, as strong relative value versus equities suggests high yields are drawing LDI support.
Key highlights:
- Macro and policy backdrop – Fed caution persists, awaiting tariff outcomes
- Yields, curves and spreads – Curve steepening stalls in US but trend remains intact
- IG credit and MBS – Tariff crisis, what crisis? Credit spreads largely unwind April spike
- High yield credit analysis – CCC returns rebound strongly, as risk appetite returns
- SI bond analysis – Duration and sector weights drive SI Corp relative performance
- Performance – Dollar weakness dominates Q2 and YTD returns, led by Bunds
These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curve 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.
