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.

Markets continued to grapple with volatility in April, as rising interest rates and broader macroeconomic uncertainty sent most major asset classes sharply lower.

The duration-sensitive Barclays Agg posted its first positive return of the year in April as long-term interest rates drifted lower.

Leveraged credit rises in April | Leveraged credit yields tighten, loans trade tight to high yield

As interest rates rose, high yield bonds and senior secured loans outperformed more duration-sensitive asset classes.

While the economic environment is unclear, we believe we can glean valuable insights about credit markets from implied market default rates.