Q1 2023 Investment
Grade Corporate Market
Review and Outlook

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Investment Grade Portfolio Team
MAR 31, 2023

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Public Fixed Income

The first quarter of 2023 opened with a risk on sentiment and positive returns, but shifted sharply amidst bouts of volatility in the late innings of March 2023. The welcomed weakness in January’s inflation data coupled with investment grade supply technicals, specifically weak issuance from the banking sector as well as long dated industrials, spurred a short-lived credit rally marking January the third consecutive month of which spreads tightened. The Federal Reserve (FED) slowed the pace of hikes at the February FOMC meeting to 25 basis points on the back of a declining, but still elevated year-over-year inflation rate of 6.4%. Moreover, issuers sought funding in a big way marking a record in issuance for February which, in our opinion, initially pressure credit spreads wider across the curve.