May 04, 2023

Fixed Income Insights - May 2023

Monthly Report

End of Fed tightening cycle beckons but debt ceiling tail risk for Treasuries

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Prompt action by regulators and lower leverage, restricted banking crisis contagion, allowing the Fed to raise rates 25bp on May 3 for inflation insurance. Lower inflation allowed government bonds and credits to retain Q1 gains in Q2, apart from the UK, but Treasuries already discount Fed easing in H2, and debt ceiling tail risk remains.

Key highlights:

  • Macro and policy backdrop – Higher US IMF growth forecasts. Markets see debt ceiling as tail risk only
  • Yields, curves and spreads – Yields show further signs of a cyclical peak
  • Sovereign and climate bonds – Green bond issuance recovered strongly in Q1, spreads tightened
  • Performance – Sovereigns consolidated Q1 gains, and credit rallied on risk appetite, but JGBs and long gilts fell

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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