Fixed income markets continued to be subdued in the third quarter, with a small jolt in early August as yield spreads moved sharply higher amid concern over unemployment data and underwhelming earnings. But markets quickly rebounded, and “both risk assets and safe havens posted strong finishes for the third quarter.”
That’s according to Canso Investment Counsel Ltd.’s October 2024 Corporate Bond Newsletter, which also says that “a decline in yields, tighter corporate credit spreads and robust fund flows positively impacted fixed income markets, while equity markets shrugged off mixed economic signals, ascending to record highs.”
Canadian investment grade credit spreads widened in August amid market volatility before rallying in September to end the quarter 4 bps tighter than where they started. In the U.S., the Investment Grade Index plotted a similar path, but with more pronounced volatility.
Canadian BBB-rated issues performed relatively well, “but in absolute terms are much wider than down south, particularly within longer term bonds,” Canso writes.
Overall, investment grade new issues were once again well received by investors in the third quarter, and are tracking well above last year’s pace – and not too far from record levels of 2021, Canso says, pointing to a number of new corporate bond deals.
In the U.S. High Yield market, demand for yield “continues to be resilient as investors look to lock-in and benchmark focused managers are forced to accept a meagre risk premium to stay fully invested.”
To learn more about those issues and about Canso’s overall views of the bond market this past quarter, check out the October 2024 Canso Corporate Bond Newsletter.
You can also read Canso’s overall thoughts on markets in the October 2024 Canso Market Observer.
DISCLAIMER: The views and information expressed in this publication are for informational purposes only. Information in this publication is not intended to constitute legal, tax, securities or investment advice and is made available on an “as is” basis. Information in this presentation is subject to change without notice and Canso Investment Counsel Ltd. does not assume any duty to update any information herein. Certain information in this publication has been derived or obtained from sources believed to be trustworthy and/or reliable. Canso Investment Counsel Ltd. does not assume responsibility for the accuracy, currency, reliability or correctness of any such information.
