Monthly report
Are US Treasuries preparing for a return to Goldilocks?
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Overview
Despite G7 goods disinflation, long government yields backed up further in February, after stronger US data showed the economy’s resilience. Equity market out-performance drove further credit gains, led by high yield, as the risk rally continues and similarities with Goldilocks increase. China and EM remain safe havens among government bonds.
Key highlights:
- Macro and policy backdrop – Goods inflation falls sharply but easing awaits lower services inflation
- Yields, curves and spreads – Bear inversion continued in February, while US spreads widen
- Credit and MBS analysis – Credit remains in a sweet spot, led by Euro and EM in investment grade
- High yield credit analysis – High yield credit benefits from short duration and global risk rally
- Sovereign and climate bonds – Green sovereigns underperformed in February due to extra duration
- Performance – Another tough month for G7 longs, as China, EM and credit outperform again
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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