Global Bond Market Brief

Notes from the Global Fixed Income Desk

By Rich Taylor & Joyce Huang, CFA - February 2019

Market and Performance Summary

Treasury yields show little change. The benchmark 10-year U.S. Treasury yield finished February only 1 bp higher than it was 30 days earlier. Yields headed slightly lower until late February, when the government released its fourth-quarter GDP report. Although growth moderated compared with the third quarter, it was stronger than many expected, driving Treasury yields higher.

Yield curve steepens slightly. Amid continued dovish language from the Fed, the two-year Treasury yield fell 6 bps to 2.52% for the 30-day period, and the yield curve steepened slightly. In terms of total return, shorter-duration securities were up fractionally, while longer-duration bonds declined.

Risk remains in favor. Against a backdrop of upbeat corporate earnings reports and better-than-expected economic growth, corporate bond returns advanced modestly. Performance from high-yield corporates was even stronger, bolstered by the rallying stock market and rising oil prices.

Global yields mixed. Although economic growth continued to slow in Europe, yields in the eurozone were mixed. For example, yields were higher in Spain, Italy, and France and flat in Germany. U.K. bond yields were up slightly, despite continued Brexit-related uncertainty. Dovish comments from the Fed helped support gains among external emerging markets (EM) bonds, while a stronger U.S. dollar pressured returns for local EM bonds.

Rich Taylor
Rich Taylor
Sr. Client Portfolio Manager
Joyce Huang, CFA
Joyce Huang, CFA
Sr. Client Portfolio Manager

Global Bond Market Brief

Notes from the Global Fixed Income Desk

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