Monthly report
Higher for longer rates returns as the dominant narrative
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Overview
Government bonds stabilised in March but failed to match equity market gains, as early easing prospects receded. Resilient US growth, early signs of European recovery, a disinflation stall and the end of BoJ curve control capped G7 government bond rallies. High yield credit’s closer correlation to equities drove further gains in Q1.
Key highlights:
- Macro and policy backdrop – US soft landing and disinflation stall herald return of “higher for longer” rates
- Yields, curves and spreads – Curves revert to bear inversion in Q1 after brief bull steepening in Q4
- Credit and MBS analysis – Spreads tighten further, and IG spreads converge on RMBS despite agency guarantee
- High yield credit analysis – CCC credits have outperformed in the 2023-24 rally
- Sovereign and climate bonds – SI bonds broadly tracked parent indices in Q1, though Green WBIG outperformed
- Performance – HY credit again outperformed in Q1, as G7 government bonds de-coupled from equity market rallies
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.
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.
