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.

Markets broadly rallied in April on the back of unprecedented stimulus by Congress and the Federal Reserve. HY Bonds posted their strongest monthly performance since January 2019 while Senior Secured Loans recorded their largest one-month gain since 2009. A decline in interest rates following an early-month spike boosted the duration-sensitive Barclays Agg.

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.

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.

Are credit markets poised for a bounce back? They have never seen two consecutive down years. This week’s chart looks at historical credit returns.

Stocks remain expensive and credit markets may offer an attractive alternative. This week’s chart looks at diverging valuations over time.