How Bonds Have Fared Since 8/4/20

Bob Carey
Chief Market Strategist

Bio
X • LinkedIn

Blog Home

Send Us Your Comments And Questions

RSS Feed

How Bonds Have Fared Since 8/4/20

Posted Under: Bond Market

View from the Observation Deck

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.
From 8/4/20 through 11/16/21, its yield rose from 0.51% to 1.64%, or an increase of 113 basis points. Its closing high for the period was 1.74%, set on 3/31/21.
As indicated in the chart above, the worst-performing bond categories for the period all track high-grade debt.
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.
Emerging market bonds delivered a positive total return for the period captured in the chart, but intermediate-term global government bonds were in negative territory (see chart). The U.S. Dollar Index (DXY) rose by 2.72% over the same period, according to Bloomberg. That gain is enough to provide a drag on the returns on foreign bonds, in our opinion.
Inflation is heating up. The trailing 12-month CPI (Consumer Price Index) stood at 6.2% in October 2021, a level not seen since the 6.1% rate posted in December 1990, according to data from the Bureau of Labor Statistics.
Investors funneled an estimated net $650.77 billion into Taxable Bond mutual funds and exchange-traded funds (ETFs) and $120.21 billion into Municipal Bond funds and ETFs for the 12-month period ended 9/30/21, according to Morningstar.

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, November 18, 2021 @ 11:37 AM • Post Link

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.

Most Current Posts

<<< Newer Posts • Older Posts >>>

Search Posts

MARKET ANALYSIS

Market Commentary and Analysis
•	Market Commentary Video
•	Monthly Talking Points
•	Quarterly Newsletter
•	Market Observations

Subscribe To Receive Email

PREVIOUS POSTS
•	How Defensive Sectors Have Fared During Periods Of Elevated Inflation
•	A Snapshot of Growth vs. Value Investing
•	A Snapshot Of Growth vs. Value Investing (Small-Caps)
•	A Snapshot Of The U.S. Dollar
•	Sector Performance Via Market Cap. (2020 Bear Market & New Bull Market)
•	A Snapshot Of Materials Stocks
•	The Price Of Crude Oil Has Surged During The COVID-19 Pandemic
•	Passive vs. Active Fund Flows
•	A Global Snapshot Of Government Bond Yields
•	The Price Of Natural Gas Has Surged