Monthly report
Treasuries re-calibrate US monetary/fiscal balance
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Overview
US yields proved volatile in November, as fears about further fiscal stimulus were eased by the new Treasury Secretary nomination, and the view his financial market experience may ease debt funding issues. The Fed and BoE are skewed towards higher for longer rates, while Bunds benefited from deflationary strains. China is the best YTD performer.
Key highlights:
- Macro and policy backdrop – Fed remains data-driven for December FOMC
- Yields, curves and spreads – Curves prove volatile in Q4, flattening end-month
- IG credit and MBS – Credit remains in a sweet spot, as IG spreads dip below MBS
- High yield credit analysis – HY credits remain best performing fixed income class
- SI sovereign bond analysis – Green Sovereigns outperformed over 3M and 1Y
- Performance – long Eurozone bonds led 1 month returns, despite stronger USD
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