Market commentary

Credit markets continued their fast start to the year, posting solid returns in February. The duration-sensitive Barclays Agg declined modestly, underperforming credit indices.

Following a month of heightened volatility, the leveraged credit markets rebounded in January. High yield bonds posted their largest monthly return since 2009 and senior secured loans erased all of the declines experienced in December.

Amidst broad market volatility and record outflows, HY Bonds and Senior Secured Loans fell in December. 10-year Treasury rates fell as investors sought safety in government bonds.

Despite positive equity returns for the month, fixed income markets signaled a risk-off view as credit markets declined and the 10-year Treasury rate fell.

Credit indices fell alongside equities in October, while rising interest rates weighed heaviest on the Barclays Agg. Equities and high yield credit declined in a volatile trading month. Senior Secured Loans generally held steady and captured upside to October’s rising rates, which caused the Barclays Agg to trade down.

Strong corporate and economic data caused high yield bonds and senior secured loans to rally. High duration portfolios, like the Barclays Aggregate, continued to struggle amid rising rates. High yield bonds generated their strongest quarterly return since Q1 2017.