Monthly report
Higher for longer still the dominant US narrative
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Overview
Growth and inflation divergences persist, reflected in G7 policy settings. The Fed’s, and BoE’s, higher for longer stance on rates is driving wider US and UK spreads and dollar strength. Political uncertainty may explain higher Bund yields, after another bond vigilante attack on French OATs. China and HY credit proved the best performers in 2024.
Key highlights:
- Macro and policy backdrop – Fed eases but scales back expectations for 2025
- Yields, curves and spreads – US spreads widen on stronger growth. Curves steepen
- IG credit and MBS – Outright US and UK yields still high, despite spread convergence
- High yield credit analysis – High yield the strongest fixed income sector in 2024
- SI sovereign bond analysis – SI sovereigns mixed in Q4, but corporates outperformed
- Performance – Only long China government bonds showed positive returns in Q4
Starting February 2025, we will be combining our UK edition and the Eurozone edition into a consolidated Europe (Eurozone and UK) edition.
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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