Corporate Bond Market Returns

Index data provided by Markit Group Ltd

i) YTD Returns 2017: (to end February)



It’s equities that lead the charge both for the month and YTD. The DAX returned 1.5% in the month and the FTSE a very good 2.3%, representing a decent pick-up versus January’s performance for them both. For the year to date, those equity indices have returned 3.1% and 1.05%. Recall that the FTSE had been in the red in January. US indices have done even better up over 5% YTD!

In much the same way, for fixed income investors, February has been excellent. At least in the sense that the rally in government bond markets through the month reversed a fair degree of the decline seen in January and reduced the losses YTD from a total returns perspective. That, after a poor month which saw January return -2.5%.

In February, Eurozone government bonds, as measured by the Markit iBoxx index, returned +1.1% leaving returns for the first two months to come in at -1.1%. We’re going to need a decent rally through March in government bonds for us to get back closer to being in the black for the first quarter.

In credit, sterling has returned 1.6% YTD after returning a stunning 2.6% in February on the back of the massive rally in Gilts.

We closed February with the iBoxx index at B+137.5bp, and returns for the month up at 1.2%. For the year so far, that’s +0.45% but much of it has been gained by the rally in the underlying and a bit of carry, with spreads on the benchmark 3bp wider in the month.

The high yield index returned +0.9% in February and is up 1.4% in 2017. The index spread is 37bp tighter this year, with this market having a particularly good time of it.

ii) IG & HY Corporate Bond Total Returns

iii) Investment Grade Corporate Bond Total Returns

iv) High Yield Corporate Bond Total Returns