Monthly Report
Fed caution on inflation, but Treasuries front-run easing, leaving tail risks?
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Fed concerns about inflation persisting above target were evident at the February FOMC. The big rally and bull inversion of the Treasury curve has parallels with 2018/19, but is at risk if the labor market tightens again. Short-dated credit remains in a sweet spot, helped by evidence of a soft landing and low default rates.
Key highlights:
- Growth & inflation expectations – US soft landing remains intact, but European inflation is sticky
- Yields, curves and spreads – The disconnect between cautious central banks and market optimism on rates widened
- Performance – Duration became the investor’s friend in the January rally, but 12M returns remain deeply negative
- Sovereign and climate bonds – Swings in relative performance in 2022/23 were led by duration and country weights
These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curves 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.
