Investment Grade Corporate Market Review and Outlook Q2

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Investment Grade Corporate Market Review and Outlook Q2 - 2022

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Investment Grade Portfolio Team
JUN 30, 2022

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During the second quarter of the year, volatility and uncertainty was a persistent theme. Inflation remained elevated, with the year-over-year CPI figure reaching a high of 8.6% in May. As companies witnessed deteriorating margins and consumer sentiment reached an all-time low, the Federal Reserve continued to emphasize its hawkish stance. With the goal of curtailing inflation and achieving price stability, the Fed raised their target rate 50 basis points in May and an additional 75 basis during the June FOMC meeting. The 10-year Treasury yield started the quarter at 2.34%, reached a high of 3.47% prior to the June meeting, then rallied to end the month at 3.01%. The MOVE index, a measure of interest rate volatility, reached highs not seen since 2009. Overall, the Treasury curve shifted upwards across all maturities and led by the front end, with 3-month and 2-year Treasuries rising 114 and 62 basis points, respectively. The 5s/10s and 20s/30s curves ended the quarter inverted three and 26 basis points1.