Credit market performance diverged in December. High yield bonds started the month higher on optimism that inflation may be cooling before hawkish Fed rhetoric weighed on the asset class over the latter half of December.

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%.

Vaccine-fueled optimism drove credit markets steadily higher throughout 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.

Credit markets saw another month of positive returns in August as high yield bonds returned 0.29% while senior secured loans returned 1.17%.

Credit markets were mixed last month. High yield built on its July rally in the first half of the month before surrendering those gains, ending August down -2.83%. Floating rate senior secured loans ended August up 1.54%.

The duration-sensitive Barclays Agg was negative in August as long-term interest rates rose slightly.

Credit markets climbed steadily higher throughout a relatively quiet August, with HY Bonds and Senior Secured Loans returning 0.98% and 1.49%, respectively. Interest rates rose throughout the month following the Fed’s inflation policy shift, sending the duration-sensitive Barclays Agg down -0.81%.

High-duration fixed income, such as the Barclays Agg, performed well in August due to falling 10-year U.S. Treasury yields. Strong corporate earnings and U.S. economic data provided tailwinds for HY Bonds and Senior Secured Loans.

Following an extraordinarily volatile March, credit markets turned higher amid the more settled macro environment.