Q4 2022 Short Duration Commentary and Outlook

Download PDF
Investment Grade Portfolio Team
DEC 31, 2022

We recommend

On the Curve: Investing in Intermediate Corporate Fixed Income 

Short and Intermediate Duration: Q1 2022 Recap, Portfolio Actions & Outlook

Explore Strategies

Public Fixed Income

Investment Grade Credit

Recap: In keeping with 2022’s sometimes topsy-turvy market moves driven in part by major global central banks responding to multidecade high inflation, the fourth quarter offered a little of everything with spreads gapping wider to the highs of the year in October, then ripping tighter in November before holding fairly steady in December to close out the year well above where they began. After a sloppy end to September with credit spreads widening, we saw the weakness carry over into October with the corporate bond market further hurt by investor selling on macro concerns and uncertainty over the pace of continued central bank monetary policy tightening as the front end of the market bore the brunt of the selloff. The market reversed course in November driven in part by some of the factors that had been weighing on spreads since March dissipating, including a decline in interest rate volatility, a fall in the value of the U.S. dollar, drop in Treasury yields and expectations for the Federal Reserve (the “Fed”) to downshift its pace of interest rate hikes at the December FOMC meeting.