Monthly report
Curves steepen with longs at post-GFC yield highs
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Overview
The relief rally in equities and tighter spreads eased financial conditions in May, even if the Fed did not match European moves. Some signs of a switch to focus on earnings growth and fundamentals emerged, as lower rates drove curves steeper, led by JGBs. Long yields near 5% are attractive historically for asset/liability matchers and income investors.
Key highlights:
- Macro and policy backdrop – Relief rally reduces pressure on Fed to ease
- Yields, curves and spreads – Mixture of bull and bear curve steepening, led by JGBs
- IG credit and MBS – A rapid recovery from tariff spread widening ensues
- High yield credit analysis – Tariff shock proves more modest than Covid or GFC
- SI bond analysis – ESG WGBI has a higher quality bias versus WGBI
- Performance – Dollar stabilizes in May. Long end and JGBs still weakest performers
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.
