Corporate Bond Market Returns

Index data provided by Markit Group Ltd

i) Returns January 2020

Bond market returns updated monthly

It’s not any surprise that we eventually closed January on the back foot. Another session of big losses on the final day of the month in equities, as the coronavirus spread escalated, meant that European equities dropped deeper into the red for the month. The S&P500 was gutted and also gave up the ghost. And all that after most bourses had set record highs across the board just a couple of weeks into the New Year.

In the eye of the virus storm, the drop in equity markets had us close January with the FTSE off by 3.4%, the Dax losing 2% and the €Stoxx50 -2.6%, all performances for the month. In the US, the S&P succumbed but was only just in the red in January while the Dow was off by 1%.

In cash credit, it’s been much better. Spreads as measured by the iBoxx index are 2bp wider in the month and total returns for the asset class up at 1.1%. Few will kid themselves, well aware that the  positive return is largely driven by the rally in rates. However, even into that market weakness in the final session of the month, the high beta AT1 market remain resolute with spreads unchanged at B+376bp (-20bp for the month).

In the UK, the sterling market has also been resolute and has shown no sign of weakness let alone panic. The iBoxx index in IG was 4bp tighter in the month, and total returns up at 2.4% in January.

Elsewhere, the euro-denominated high yield market closed the month with spreads 22bp wider but returns up in the black – just, by +0.3%.

And all of the above in fixed income – or credit rather – was made possible because of the rally in rates. Here, Eurozone rate market investors, as measured by the iBoxx index, are sitting on total returns for January of 2.5%.


ii) IG & HY Corporate Bond Total Returns (Annual)

iii) Investment Grade Corporate Bond Total Returns (Annual)

iv) High Yield Corporate Bond Total Returns (Annual)