2Q:2018 Fixed Income Market Review

Global growth remains robust, and central banks around the world continue to unwind what has been very accommodative policy, and that resulted in flatter yield curves across the board, particularly in the U.S. where the Fed hiked multiple times, but even in Europe where the ECB has committed to unwinding their asset purchases by the end of the year.

So while yields went up across the board, they went up less at the long end, which meant that most fixed income returns were flat to slightly down, and there wasn’t a tremendous amount of dispersion. What’s interesting is, in some of the bouts of volatility, whether it was the equity markets in February in the second quarter in the currency markets, most fixed income, particularly credit, was sort of immune from that volatility. The only exception being emerging market debt, where we had some idiosyncratic events, we had some individual countries that went through some turmoil, and that created some volatility and some downward pressure on prices in emerging markets.