Credit market commentary

January’s volatility spilled into February with most major asset classes posting another monthly decline. Continuing concerns over inflation, interest rate volatility and the impending Fed tightening cycle weighed on markets to start the month before focus shifted squarely to geopolitical tensions.

It was a volatile start to the year for most major asset classes. Ongoing COVID concerns, elevated inflation, rising interest rates and a hawkish Fed roiled markets for much of the month.

Credit markets were positive in December. After two straight monthly declines, HY bonds posted their best month of the year, up 1.88%, while loans returned 0.64%.

Credit markets declined in November. Loans returned -0.16% while HY bonds were down -1.02%, their second monthly decline and worst performance since March 2020.

Credit markets were mixed in October. Loans returned 0.27% while HY bonds ended their 12-month streak of gains, down 0.18%.

Despite some modest weakness in high yield during the second half of September, we believe credit remains on solid footing for the remainder of 2021.