In August the yield of the S&P/BGCantor Current 10 Year U.S. Treasury Index dropped by 23 basis points from 2.56% to 2.33% where it closed out the month. Holding the 10-year alone returned 2.19% for the month and has returned 8.42% year-to-date on a total rate of return basis.
TIPS or Treasury Inflation Protection Securities also have performed well year-to-date. The return of the S&P 10 Year U.S. TIPS Index for the year has returned 8.69%. June and July were slow for the 10-year TIPS but August picked up in performance returning 0.61%.
U.S. investment grade corporate bonds as measured by the S&P U.S. Issued Investment Grade Corporate Bond Index returned 1.38% for August and have returned 7.05% year-to-date. The pace of return is similar to 2012 when the index returned 8.86%. When comparing the rating segments of the index, AAA bonds returned 1.70% for the month, the same return as BB bonds. Year-to-date these bonds have returned 8.01%.
The S&P U.S. Issued High Yield Corporate Bond Index had a strong August returning 1.47% for the month. August’s return makes up for the -1.31% performance in July and is second to the February rally of 1.92% though not enough to outpace investment grade year-to-date.
This article was written by Kevin Horan, director fixed income indices, S&P Dow Jones Indices.
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