Investment Grade Corporate Market Review and Outlook

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Investment Grade Corporate: Market Review and Outlook

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Investment Grade Portfolio Team
MAR 31, 2021

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Public Fixed Income Quarterly Commentary: Fourth Quarter 2020

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In financial markets, asset class performance in the quarter was disparate. In fixed income, the story of the quarter was of spiking interest rates, with the 10-year note nearly doubling to end the quarter at 1.74%. However, the curve was markedly steeper as the Fed kept the front end pinned and the 2-year barely budged1. With coupons as low, and durations as long as they have ever been, the rise in rates resulted in historically poor returns for U.S. fixed income. As shown in Figure 1, the U.S. long bond and the Bloomberg Barclays U.S. Aggregate Index chalked up their worst quarter in forty years, generating total returns of -13.51% and -3.37% respectively.