Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  How Bonds Have Fared Since 8/4/20
Posted Under: Bond Market
Supporting Image for Blog Post

 
View from the Observation Deck  
  1. The yield on the 10-year Treasury note (T-note) closed at an all-time low of 0.51% on 8/4/20, according to Bloomberg.  
  2. From 8/4/20 through 3/15/22, its yield rose from 0.51% to 2.15%, or an increase of 164 basis points. The 2.15% closing yield on 3/15/22 was the highest for the period.   
  3. As indicated in the chart above, the worst-performing bond categories for the period all track high-grade debt. 
  4. Since 8/4/20, investors have favored speculative-grade bonds over investment-grade debt, as evidenced by the strong total returns posted by leverage loans (senior loans) and high yield corporate bonds. 
  5. Emerging market bonds and intermediate-term global government bonds were deep into negative territory for the period captured in the chart. The strength in the U.S. dollar definitely had a negative impact on the performance of foreign bonds. The U.S. Dollar Index (DXY) rose by 6.13% over the same period, according to Bloomberg.   
  6. Inflation has surged. The trailing 12-month CPI (Consumer Price Index) stood at 7.9% in February 2022, up from 1.7% a year earlier. The CPI is at a level not seen since 1982, according to data from the Bureau of Labor Statistics.
  7. On 3/16/22, the Federal Reserve ("Fed") initiated a 25 basis point hike in the federal funds rate. The median Fed official is signaling another six hikes, totaling 150 basis points, through year-end, according to Brian Wesbury, Chief Economist at First Trust Advisors L.P. That would equate to 175 basis points in aggregate. The Fed also signaled it could raise rates an additional 75-100 basis points in 2023.   
This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The ICE BofA U.S. High Yield Constrained Index tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. The S&P/LSTA U.S. Leveraged Loan Index is a market value-weighted index designed to measure the performance of the U.S. leveraged loan market. The ICE BofA Emerging Markets Corporate Plus Index tracks the performance of U.S. dollar and euro denominated emerging markets non-sovereign debt publicly issued in the major domestic and eurobond markets. The ICE BofA Fixed Rate Preferred Securities Index tracks the performance of investment grade fixed rate U.S. dollar denominated preferred securities issued in the U.S. domestic market. The ICE BofA 1-3 Year U.S. Corporate Index is a subset of the ICE BofA U.S. Corporate Index including all securities with a remaining term to maturity of less than 3 years. The ICE BofA 1-3 Year U.S. Treasury Index tracks the performance of U.S. dollar denominated sovereign debt publicly issued by the U.S. government with a remaining term to maturity of less than 3 years. The ICE BofA 22+ Year U.S. Municipal Securities Index tracks the performance of U.S. dollar denominated investment grade tax-exempt debt publicly issued by U.S. states and territories, and their political subdivisions with a remaining term to maturity greater than or equal to 22 years. The ICE BofA U.S. Corporate Index tracks the performance of U.S. dollar denominated investment grade corporate debt publicly issued in the U.S. domestic market. The ICE BofA 7-10 Year Global Government (ex U.S.) Index tracks the performance of publicly issued investment grade sovereign debt denominated in the issuer's own domestic currency with a remaining term to maturity between 7 to 10 years, excluding those denominated in U.S. dollars. The ICE BofA 7-10 Year U.S. Treasury Index tracks the performance of U.S. dollar denominated sovereign debt publicly issued by the U.S. government with a remaining term to maturity between 7 to 10 years. The ICE BofA Freddie Mac Mortgage Backed Securities Index is a subset of the ICE BofA U.S. Mortgage Backed Securities Index including all generics representing pools issued by Freddie Mac.

Download a PDF of this post, please click here.
Posted on Thursday, March 17, 2022 @ 11:15 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
A Snapshot of Growth vs. Value Investing
Sector Performance Via Market Cap. (2020-2021 and YTD-3/9/22)
A Perspective On Crude Oil Prices
A Snapshot Of The U.S. Dollar
A Snapshot Of Bond Valuations
A Snapshot Of The Last Four 10%-Plus Declines In The S&P 500 Index
A Snapshot Of Gold, Silver And The Miners
Top-Performing S&P 500 Index Subsectors YTD (Thru 2/15)
Rising Bond Yields And Stock Performance
This Covered Call Index Tends To Outperform The S&P 500 When Returns Are Modest Or Down
Archive
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.