- Thursday’s Consumer Price Index “CPI” print was the big story of the week, with core CPI for October coming at +6.3% vs. expectations of +6.5%. The report drove equities and other risk assets sharply higher on expectations that inflation growth has begun to slow, and the Federal Reserve “Fed” will be less aggressive in its rate-setting policy.
- U.S. Equities were up +6% on Thursday and ended the week +8%, with technology stocks leading the way. The bond markets were closed on Friday in observance of Veteran’s Day, but yields were lower across the curve, with benchmark 5-year treasury yields -40bps lower than the previous week. (Table; Chart 1)
- The expected peak for the Fed interest rate fell from 5.3% to 5.1%, with the market pricing in approximate +100 bps in additional Fed hikes, including +50 bps at the December 14 meeting. (Chart 2).
- Longer term, the market is more sanguine on interest rates and inflation, with the 2-year treasury yield expected to decline from 4.6% today to 3.8% in two-years’ time. (Chart 3).
- Credit assets reported positive returns across the board, driven by lower rates and market optimism, with Emerging Market debt +2.4% higher, High Yield +1.3%, and BBB debt returning +2.6% on the week. With 60% of economists still expecting a recession in the near-term, returns were strongest in higher-quality assets. (Chart 4)
- With High Yield +1.3% on the week, BB and B gained (+1.4% and +1.3%, respectively), while CCC lagged, +0.5%. (Chart 5)
- High Yield Sectors were broadly positive for the week , with Consumer Non-Cyclicals leading (+1.6%) while TMT and Financials lagged (+1.0%). (Chart 6)
The Week by the Numbers
Sources: Ice Data Services, JP Morgan, IHS Markit, Bloomberg, TRACE, BondBloxx
For more news, information, and strategy, visit the Institutional Income Strategies Channel.
Carefully consider each Fund’s investment objectives, risks, charges, and expenses before investing. This and other information can be found in each respective Fund’s prospectus or, if available, the summary prospectus, which may be obtained by visiting bondbloxx.com. Read the prospectus carefully before investing.
There are risks associated with investing, including possible loss of principal. Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. Fixed income investments are also subject to credit risk, the risk that the issuer of a bond will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of that bond to decline. Investing in mortgage- and asset backed securities involves interest rate, credit, valuation, extension and liquidity risks and the risk that payments on the underlying assets are delayed, prepaid, subordinated or defaulted on.
Distributor: Foreside Fund Services, LLC.
BondBloxx Investment Management Corporation (“BondBloxx”) is a registered investment adviser. The content of this presentation is intended for informational purposes only and is not intended to be investment advice. Not for distribution to the public.
Nothing contained in this presentation constitutes investment, legal, tax, accounting, regulatory, or other advice. Information contained in this presentation does not constitute an offer to sell or a solicitation of an offer to buy any shares of any BondBloxx ETFs. The investments and strategies discussed may not be suitable for all investors and are not obligations of BondBloxx.
Decisions based on information contained in this presentation are the sole responsibility of the intended recipient. You should obtain relevant and specific professional advice before making any investment decision. This information is subject to change without notice.
BondBloxx makes no representations that the contents are appropriate for use in all locations, or that the transactions, securities, products, instruments, or services discussed are available or appropriate for sale or use in all jurisdictions or countries, or by all investors or counterparties. By making this information available, BondBloxx does not represent that any investment vehicle is available or suitable for any particular investor. All persons and entities accessing this information do so on their own initiative and are responsible for compliance with applicable local laws and regulations.
Bond ratings are grades given to bonds that indicate their credit quality as determined by private independent ratings services, such as Standard & Poor’s, Moody’s and Fitch. These firms evaluate a bond issuer’s financial strength or it’s ability to pay a bond’s principal and interest in a timely fashion. Ratings are expressed as letters ranging from ‘AAA’, which are the highest grade, to ‘D’, which is the lowest grade.
Index performance is not illustrative of fund performance. One cannot invest directly in an index. Please visit bondbloxx.com for fund performance.