- Amid heightened volatility ahead of the upcoming US presidential election, the S&P 500 posted a loss in October after five consecutive months of gains and Treasury rates rose across the curve as economic data showed resilience
- September’s change in non-farm payrolls report exceeded expectations with 254,000 new jobs added, while the JOLTS report later revealed that new job openings fell to about 7.4 million, the lowest level since early 2021
- Consumer confidence surged to its highest level since January, driven by signs of strength from the labor market and positive sentiment around the overall economy; the share of consumers expecting a recession within the next year fell to its lowest level since July 2022
- Treasury yields experienced sharp rises across the curve as market participants adjusted their expectations of future rate cuts; the 2-year yield increased by 53bps over the month to 4.17% and the 10-year yield rose by 50bps to 4.29%
- Investment-grade corporate supply ended the month in-line with expectations with $95 billion in new issues priced, while high-yield issuance totaled nearly $24 billion, almost doubling the combined amount from the previous two Octobers
- High-grade corporates outperformed their Treasury counterparts as spreads narrowed by 5bps during the month to 84bps; investment-grade corporate yields increased by 44bps to 5.16%
- The yield of the Bloomberg High-Yield Index increased by 34bps to 7.33% while its spread tightened by 13bps to 282bps
- Originations of Asset-Backed Securities (ABS) totaled $40 billion in October, surpassing the previous monthly record of $38 billion set in November 2021
- Year-to-date, ABS issuance stands at $318 billion, outpacing last year’s figures by 29%; the increased supply has been fueled by an expanding investor base, robust demand from insurance companies, and banks offloading loans
- Municipal issuers rushed to borrow ahead of the anticipated election-related volatility, bringing nearly $65 billion of new debt to market
- The Bloomberg Municipal Bond Index reported a loss of 1.46% on the month, marking the worst October performance for the index since 2009
Treasury Yield Curve
MTD Returns
