Monthly report
Treasuries front-run Fed easing, but caution on easing likely after 2021-2022
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Overview
The scale of the November rally in government bonds suggests technical factors contributed, since central banks gave no indication of an early pivot, and although US growth has slowed, US core inflation of 4% remains. IG credit attracted demand, helped by absolute yield levels in the November rally and remains relatively cheap.
Key highlights:
- Macro and policy backdrop – US economy slows but continues to withstand 2% real yields without major stress
- Yields, curves and spreads – Yield curves re-inverted as markets anticipate policy easing. US spreads tightened
- Credit and MBS analysis – IG credit spreads narrowed in the November rally. RMBS spreads also ticked down
- Sovereign and climate bonds – Green corporate spreads tightened further, continuing recent outperformance
- Performance – Long dated gilts, Treasuries and Bunds led November rally, in reversal of the Q3 and October sell-off
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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