The shift in expectations for rate cuts was felt across the world as yields rose in both the developed and emerging markets. The Broad Markets Fixed Income Team explores the impact on investors.
16.05.2024 | 05:46 Uhr
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April was another challenging month for fixed income returns, following higher than expected growth and inflation data from the United States. These higher prints caused markets to push back expectations for rate cuts in the U.S. and reduce the magnitude of cuts between now and the end of 2025. The shift in expectations was felt across the world as yields rose in both the developed and emerging markets. The U.S. dollar rose 1.7% over the month, mainly due to these changes in expectations as well. Investment grade (IG) credit spreads were marginally tighter over the month, and U.S. high yield spreads widened 2 basis points (bps) while Euro high yield spreads widened 16 bps. Securitized credit spreads continued to outperform their corporate counterparts with spreads broadly tightening over the month while Agency Mortgage Backed Securities (MBS) spreads widened.
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