Monthly report
Safety in shorts and credit as negative carry and duration weigh on longs
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Overview
Spread widening, higher US yields and IMF growth forecasts, all reflect stronger US growth, as the Fed confirmed higher for longer rates. Looser fiscal/tight US monetary policy underpin the dollar. Duration and negative carry weighed on longs in April but credit survived the risk rally reversal. Financials glean support from higher for longer rates.
Key highlights:
- Macro and policy backdrop – Loose US fiscal policy and inflation uptick sustain “higher for longer” pressure
- Yields, curves and spreads – US spreads widen as longer yields edge higher, dragging G7 yields higher
- Credit and MBS analysis – IG Spreads return to pre-Covid levels, but RMBS spreads widen on Fed run-offs
- High yield credit analysis – HY credit survived the risk rally reversal in April. Single B issues outperform
- SI corporate bond analysis – PAB continues to underperform Choice and Ex FFE indices
- Performance – Another bad month for longs, and JGBs in April. Credit and China/EM bonds remain safe havens
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.
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