The US 10-2 year Treasury yield spread widened again (-95 bps) after the Federal Reserve’s pause in interest rate hikes.
The yield on the 10-year Treasury note edged up from 3.74% to 3.77% while the yield on the 2-year Treasury note rose from 4.60% to 4.72%. Conversely, the 3-month T-bill rate edged down to 5.23%.
Same situation in Europe where the yield on the German 10-year Bund advanced from 2.38% to 2.47%. The 10-2 year spread now stands at -65 bps.
Against this backdrop, investment grade corporate bond indexes were mixed. The IBOXX € Liquid Corporates index dropped by 0.36%, while the IBOXX iShares $ Investment Grade Corporate Bond Index gained 0.68%.
High-yield bond indexes were resilient. In Europe, they witnessed a gain of 0.31% (IBOXX € Liquid High Yield Index), while their US counterparts were up 0.37% (Markit iBoxx USD Liquid High Yield Capped Index).
Lastly, emerging debt denominated in local currencies saw an increase of 0.76%, while the dollar index fell from 103.50 to 102.30.