The first quarter of 2022 was one of the worst on record for the bond market. Bond markets came under intense pressure during the first quarter, with all issues posting losses amid one of the worst quarters in recorded credit market history. At their March meeting, the Federal Reserve raised interest rates for the first … Continue reading Credit Markets: Is A Recession Coming? →

The average U.S. bond had a negative total return in 2021 for the first time since 2013. The fourth quarter was another volatile one for interest rates as credit markets grappled with elevated inflation, the prospect of slowing economic growth in 2022, and the onset of the COVID Omicron variant. Notably, the yield curve flattened … Continue reading Credit Markets: Slower Growth Ahead? →

It was a volatile third quarter for credit markets. Interest rates continued to experience significant volatility in the third quarter with the benchmark 10-year U.S. Treasury bond beginning the quarter at 1.49%, dropping to 1.19% by early August and then rallying to close the quarter at 1.52%. This tug-of-war was due to several ongoing issues … Continue reading Credit Markets: An Interest Rate Tug-of-War →

Bond investors are not too concerned about a persistent increase in inflation. Much ink has been spilled over the past quarter on inflation, which has clearly made a resurgence as the economy has begun to recover and strengthen. But there is an ongoing debate as to whether the current inflationary forces will be a short-term … Continue reading Credit Markets: Transitory or Non-Transitory Inflation? →

Bond yields rose dramatically in the first quarter as investors began pricing in the likelihood of the strongest economic growth in the U.S. and globally in decades and corresponding inflation concerns. The rapid rise in interest rates led to bonds being the only asset class in negative territory on a total return basis during the … Continue reading Credit Markets: Strong Economic Growth and Inflation Ahead →

As much as most would like to forget about 2020, it was a year to remember for the fixed income markets. From the historically aggressive monetary policy of the Federal Reserve, to extreme volatility throughout the fixed income markets due to the pandemic, to a significant change in Fed policy, 2020 was full of surprises … Continue reading Credit Markets: A Year to Remember? →

Since bottoming at a close of 0.54% on March 9, 2020, the 10-year US Treasury yield has slowly and quietly risen nearly 70% to 0.89% as of this writing. With the Fed holding short-term lending rates in the 0-.25% range, the slope of the yield curve has steepened dramatically as seen in the chart below. … Continue reading The Good and The Bad of Rising Interest Rates →

The Federal Reserve announced a significant change in policy during the quarter. The biggest news during the third quarter for credit markets came in late August with Fed Chairman Jerome Powell announcing a change in Fed policy. Going forward, the Fed will focus on “symmetrical inflation targeting,” a fancy way of saying the Fed will … Continue reading Credit Markets: A New Policy Paradigm →

For the first time in history, the Fed is buying corporate bonds. Credit markets participated in the overall market recovery in the second quarter, thanks in large part to the actions of the Federal Reserve. All categories of bonds showed positive returns in the second quarter. The Fed was successful in averting a credit crisis … Continue reading Credit Markets: Thanks to the Fed →

During the worst first quarter in 124 years for equities, credit markets were not immune to the unprecedented volatility in capital markets due to the coronavirus outbreak. With a yield of 1.92% at the beginning of the year, the benchmark 10-year U.S. Treasury bond ended the first quarter at 0.70% – a stunning 64% drop. … Continue reading Credit Markets: Unprecedented Volatility →