Bond Bulletin: Spreads are fair, but yields are rare

After a period of heightened volatility, investment grade (IG) credit spreads have retraced to levels seen at the start of the year, but all-in yields remain elevated, creating a compelling entry point for investors. This week’s Bond Bulletin explores the current opportunity to add risk in IG credit, including which sectors and points along the curve are most attractive.

Implications for Fixed Income Investors

IG spreads have tightened to levels similar to the start of the year but all-in yields are now meaningfully higher; the combination of strong fundamentals and improving technicals presents a compelling window to add risk in IG credit. We are moving into carry opportunities, particularly at the front end of the curve. While we remain mindful of volatility and the potential for drawdowns, the US IG market stands out for its resilience and opportunity, and we expect spreads to hold firm as investor flows return and earnings momentum builds.

About the Bond Bulletin

Each week J.P. Morgan Asset Management's Global Fixed Income, Currency and Commodities group reviews key issues for bond investors through the lens of its common Fundamental, Quantitative Valuation and Technical (FQT) research framework.

Our common research language based on Fundamental, Quantitative Valuation and Technical analysis provides a framework for comparing research across fixed income sectors and allows for the global integration of investment ideas.

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