MARKET NEWS
- Markets moved through April with a broadly constructive, risk-on tone, shaped by geopolitical developments in the Middle East, mixed inflation signals, and shifting expectations for US monetary policy
- Oil prices saw some relief following a US-Iran ceasefire announcement and subsequent extension before ending the month higher
- March inflation data was mixed, as CPI grew 3.3% year-over-year, driven primarily by a sharp increase in energy costs, while Core CPI remained more subdued, growing 2.6% year-over-year
- Non-farm payrolls increased by 178k in March, exceeding estimates of 65k, while the unemployment rate declined to 4.3%, partially due to a decline in the labor participation rate
- The Federal Open Market Committee (FOMC) kept rates steady for a third straight meeting, though an unusually high number of dissents highlighted uncertainty around the Fed’s policy stance amid the ongoing conflict in the Middle East
- While the April meeting marked Jerome Powell’s final one as Fed Chair, he signaled his intention to remain on the FOMC as a governor after his term ends on May 15
- Treasury yields ended the month higher, driven by growing expectations of a Fed rate hike; after bouts of steepening earlier in April, the curve ultimately flattened overall
- Investment-grade (IG) and high-yield (HY) corporate spreads tightened by 11bps and 49bps, respectively, to 78bps and 268bps, marking their lowest levels since the start of the US-Iran conflict
- Basic Industry and Insurance were among the best performing sectors, while Communications lagged; lower-quality issuers outperformed higher-quality issuers, with CCCs outperforming BBs by 137bps
- IG issuance was robust throughout the month, led by sizable financial and technology deals; supply totaled $178 billion, exceeding expectations and marking the second busiest April on record
- New issue concessions have averaged 4bps year-to-date, compared to 2025’s average of 3.3bps
- HY borrowers were similarly active, bringing $38 billion to market, driven by center expansion and infrastructure-related bond sales, making it the busiest month since September 2025
- Agency mortgage-backed securities (MBS) outperformed other securitized sectors as interest rate volatility subsided; MBS spreads tightened 4bps to 20bps
- Municipal bonds outperformed Treasuries as muni/Treasury ratios fell across the curve
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