Category: Investment Grade Weekly

Credit spreads drifted wider this week while Treasury yields climbed higher.  The OAS on the Corporate Index closed at 77 on Thursday September 24^th after closing the week prior at 75.  The 10yr Treasury ended last week at 5% and it closed at 5.2% on Thursday evening.  Through Thursday, the Corporate Bond Index year-to-date total return was -2.46% and the yield to maturity for the index was 5.95%.

Bond Market Weekly

Investment grade borrowers priced $35bln of new debt this week which fell short of the $40bln estimate.  Syndicate desks are looking for $50bln in supply next week.  The calendar will be tilted toward the front end of the week as borrowers are likely to stay at bay on Wednesday and Friday with the release of inflation readings and the nonfarm payroll report on each of those mornings, respectively.  There is one jumbo-issuer in the on-deck circle in the name of Paramount, as it cleared the final hurdles for its acquisition of Warner Brothers.  Paramount has been meeting with investors this week in preparation for its imminent capital raise that will occur across a variety of fixed income asset classes, including loans, high yield credit and investment grade credit.  YTD issuance now stands at $1.644 trillion.  Next week, dealer forecasts are calling for new issue supply of $50bln.

Treasury yields dominated the news flow this week in the financial markets.  The UST 30yr hit an intraday high of 5.5%, its highest level since June 2004 while UST 10yr traded up to 5.22%, its high-water mark since June 2007.  We sense that rates have now gone too far but also have the view that it is impossible to accurately predict the direction of interest rates over longer time horizons.  There is no easy answer for the latest move and there are a variety of factors that are contributing to higher rates.  Higher fuel prices, government deficits and inflation concerns are but a few of the reasons.  There is also the issue of higher yields elsewhere around the world –take for instance Japan, where the JGB 10yr hit its highest level since the late 1990s and the JGB 30yr reached an all-time high of 4.22%.

While it is unpleasant to deal with this level of volatility in interest rates, investors can take comfort in the fact that higher yields provide a meaningful level of downside protection.  We will run through a basic example to illustrate.  As of September 24^th, the Bloomberg US Corporate Bond Index had an option adjusted duration of 6.41 and a yield to worst of 5.95%.  If an investor purchased an individual bond with a 6.4 duration and a 6% coupon, and the next day Treasury yields moved up 100bps in a linear fashion (this never happens but this is a simplistic example) then the effect of the duration would result in a 6.41% decrease in the value of that particular bond.  Note we are also making the assumption that the bond experiences no change in the credit spread at which it trades (something that is very unlikely).  If the investor continues to hold that bond for a period of 12 months while credit spreads and Treasury yields remain unchanged then that investor will have clipped 6% worth of coupon while posting a total return of -0.41% for the 1yr holding period.  In other words, one year of coupon almost totally negates the value that the bond lost due to the move higher in rates.  And remember, the investor gets that coupon every year that they hold the bond.  Note that we are also ignoring the fact that the bond’s duration will be lower after holding it for one year and thus the simple march toward maturity will have helped the bond to regain some of its value over time.  This example is somewhat extreme given the sharp 100bp move higher in rates, it is an individual bond and not a diversified portfolio, credit spreads didn’t move, and neither did Treasuries.  If spreads were to move lower during the previous example then the investor could even post a positive total return on the holding in the face of a 100bp move higher in Treasury yields.  This is the power of higher yield/coupon.

Flows

According to LSEG Lipper, for the week ended September 23^rd, short and intermediate investment-grade bond funds reported a net inflow of +1.79bln.  2026 year-to-date net flows are +$103.6bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

This week credit spreads were tighter and Treasury yields bounced around and were relatively unchanged during the period as went to print on Friday.  The OAS on the Corporate Index closed at 76 on Thursday September 17^th after closing the week prior at 79.  The 10yr Treasury ended last week at 4.97% and it closed at 4.93% on Thursday evening.  Through Thursday, the Corporate Bond Index year-to-date total return was -1.02% and the yield to maturity for the index was 5.70%.

Bond Market Weekly

It was a busy week for the investment grade primary market, but volume came up just shy of the $55bln forecast.  The shortfall can largely be attributed to a somewhat volatile backdrop for risk assets on Tuesday as equities sunk and Treasury yields inched higher.  The FOMC on Wednesday always keeps issuers on the sidelines. There was a return to normalcy on Thursday morning with a fresh slate of deals.  Corporate borrowers priced $53.7 of new investment grade debt during the week.  YTD issuance now stands at $1.585 trillion.  Next week, dealer forecasts are calling for new issue supply of $40bln.

The main economic event of the week was the FOMC delivering its first policy rate increase since July 2023.  Although this was largely anticipated with interest rate futures pricing a 90+% probability in the days leading up to the meeting, there were some very valid arguments for the Fed to have held rates steady.  Much of the recent heat on the inflation front has come from supply driven shocks related to tariffs and geopolitical turmoil in the middle east as well as investor concern over the growing U.S. national debt –these are items that the Fed simply cannot influence with changes in the policy rate.  Despite this, we do think it was necessary for the Fed to hike in order to establish gravitas with the Treasury market and signal that inflation is not improving with sufficient speed.  Case in point, Treasury yields actually moved lower the day immediately following the FOMC meeting.

Barring a spate of softer inflation readings, we would expect another 1-2 hikes over the next 12 months with up to three 25bp hikes to complete the current tightening cycle.  This would effectively remove the 75bps of cuts that the Fed had delivered at the end of 2025 but it would not reverse the 75bps of cuts that occurred in 2024.  There has only been one example in recent history where a Federal Reserve hiked only once during a tightening cycle.  That occurred in March 1997, but that was unique, because the Asian financial crisis began in July 1997, followed closely by a Russian default and the fall of Long-Term Capital Management.  This prompted the Fed to begin cutting rapidly in September of 1998 to provide accommodation to the financial markets.

The next FOMC meeting is not until October 28^th, so there will be plenty of economic data to parse over the next 40 days.  As we go to print, interest rate futures are split as to whether the Fed will elect to move forward with a second hike during this cycle at the October meeting.

Flows

According to LSEG Lipper, for the week ended September 16^th, short and intermediate investment-grade bond funds reported a net outflow of +0.639bln.  2026 year-to-date net flows are +$101.9bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

This week credit spreads were tighter and Treasury yields were higher.  The OAS on the Corporate Index closed at 78 on Thursday September 10^th after closing the week prior at 80.  The 10yr Treasury ended last week at 4.78% and it closed at 4.96% on Thursday evening.  Through Thursday, the Corporate Bond Index year-to-date total return was -1.44% and the yield to maturity for the index was 5.71%.  This is the highest yield offered by the index since April 2024.

Bond Market Weekly

The week immediately following Labor Day is very typically one of the busiest of the year and IG borrowers priced $68bln of new debt relative to the consensus estimate of $70bln.   Treasury and equity volatility helped to reveal some attractive new issue concessions.  YTD issuance has now pushed past the $1.5 trillion mark which is more than 30% ahead of 2025’s pace.  Next week, syndicate desks are looking for $55bln in new supply.

Credit spreads have been remarkably stable for the past six months, rangebound between 70 and 80 basis points, even in the face of wild swings in oil prices and geopolitical instability.  Treasuries, on the other hand, have been quite volatile in recent weeks, especially this week.  There is a myriad of reasons for the sell-off in rates, but the lack of progress in Iran and sharply higher commodity prices are the main driver, in our view.  It doesn’t help matters when President Trump claims that every American will receive a $5,000 economic stimulus at a cost of more than $1 trillion-plus to the U.S. Treasury.[i]  Treasury Secretary Scott Bessent moved to calm the Treasury market this Wednesday with an announcement that the Treasury Department would repurchase $6bln worth of longer dated government bonds.  While this was slightly more than the $4bln baseline that he had previously mentioned, but investors were disappointed, as expectations had shifted toward a larger number.  This is the problem with these operations –they can backfire and that is what happened here at least for the short term.  One could argue that Treasury yields would be lower right now if Bessent had not intervened at all.  Still, corporate bonds are not Treasuries, and corporate credit spreads have helped dampen the blow of higher Treasury yields.  High yield corporates are positive YTD while investment grade corporates are only modestly in the red.  IG credit looks compelling with the yield on the Corporate Index at its highest level in 2.5 years.

On the economic front, this week gave us some heavy appetizers in the form of PPI and CPI with both releases matching economist estimates.  The main course is the FOMC meeting next Wednesday.  As of Friday morning, traders were pricing an 88% chance of a +25bp hike based on Fed Funds futures.  In our opinion the Fed is in a bit of a conundrum because two of the main drivers of inflation are spending related to artificial intelligence and higher oil prices due to the conflict with Iran.  The Fed can hike as much as it wants and it will not change the behavior of AI hyperscalers that can afford higher borrowing costs nor will it have any impact on the Iranian regime.  We think that the FOMC probably knows this so there is an outside chance that they may hold the line next week but ultimately a hike seems like a foregone conclusion at this point.  Interestingly, traders are not looking for much of a hiking cycle, with a mere 3.4 hikes priced between now and the beginning of 2028.[i]

Flows

According to LSEG Lipper, for the week ended September 9^th, short and intermediate investment-grade bond funds reported a net inflow of +3.88bln.  2026 year-to-date net flows are +$102.5bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results

[1] CNBC, September 10 2026, “Trump’s $1 trillion-plus ‘dividend’ plan meets immediate bipartisan pushback”

[1] Bloomberg, September 11 2026 10:07 AM EST, “World Interest Rate Probability”

Credit spreads moved slightly wider this week.  The OAS on the Corporate Index closed at 75 on Thursday June 25^th after closing the week prior at 73.  The 10yr Treasury ended last week at 4.45% and it closed at 4.37% on Thursday evening.  Through Thursday, the Corporate Bond Index year-to-date total return was +1.12% and the yield to maturity for the index was 5.16%.

Bond Market Weekly

SpaceX made a splash in the primary market this week when the company launched a $25bln inaugural bond deal across 5 maturities.  SpaceX was given investment grade ratings by the three major rating agencies at the end of last week.  It is highly unusual for a company that has negative earnings and significant cash burn to have an investment grade rating.  As a bond manager, we rely on our own internal research; we like to think of the rating agencies as more of a lagging indicator of the credit health of a company, but in the case of SpaceX, the agencies are giving the company a great deal of credit for financial success that has yet to come.  Understandably, the company is also given credit for its strategic partnership with the US government as well as the success of the Starlink portion of its business.  SpaceX also benefits from its massive $2 trillion enterprise value and the thought that it could potentially issue equity to support its balance sheet if needed.  We are skeptical that SpaceX has done enough at this point in time to have earned an investment grade rating.  As a bondholder, the upside for our clients in most bonds is par, or a slight premium to par if a credit outperforms or if the interest rate environment moves meaningfully in a favorable direction.  If SpaceX goes absolutely gangbusters the next few years the upside for bondholders is extremely limited relative to equity holders.  In our view, the new SpaceX bonds did not offer enough return potential for the risks incurred.  The new bonds have underperformed during their first few days of trading, particularly the longer dated maturities.

Looking at the entire primary market, $53.85 billion of new debt was priced this week, which was in line with dealer forecasts.  Next week is expected to be on the lighter side with a holiday on Friday for the 4^th of July.  Syndicate desks are looking for just $10-$15bln of new supply.  Year-to-date issuance through the end of the week was $1.158tril which is up +33% relative to 2025.

Flows

According to LSEG Lipper, for the week ended June 24^th, short and intermediate investment-grade bond funds reported a net inflow of +$2.99bln.  2026 year-to-date net flows into investment grade were +$74bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads moved slightly wider during the holiday shortened week.  The OAS on the Corporate Index closed at 73 on Wednesday June 17^th after closing the week prior at 72.  Spreads are slightly tighter as we go to print on Thursday afternoon.  The 10yr Treasury ended last week at 4.48% and it closed at 4.49% on Wednesday evening.  Rates are about 5bps lower across the Treasury curve on Thursday. Through Wednesday, the Corporate Bond Index year-to-date total return was +0.55% and the yield to maturity for the index was 5.24%.

Points of Interest

The main event of the week was Kevin Warsh’s first meeting and press conference as FOMC chair.  It was an interesting juxtaposition; Warsh was adamant during the nomination process that the Fed’s policy rate was too high, but his first action as chair was delivering the views of an FOMC that is increasingly thinking about increasing the Federal Funds Rate by the end of the year.  The Fed’s dot plot showed nine officials were in favor of at least one hike (six of those were looking for multiple increases) while 8 were expecting no change and just one was looking for a cut.  Chairman Warsh did not participate in the dot plot because he does not believe it is “helpful in the conduct of policy.”    The voting members of the FOMC were unanimous (12-0) in their decision to leave interest rates unchanged.

With the advent of a new Chairman, a quick history lesson seems prudent.  The Fed did not always do regular post-meeting press conferences and it was only formally introduced in April of 2011, and it was only on a quarterly basis.  Chairman Bernanke introduced it as a way to increase central bank transparency in the wake of the financial crisis.  In 2019, Chairman Powell expanded the press conference practice to occur at the conclusion of every regular scheduled FOMC meeting.   Regarding the Summary of Economic Projections, also known as the “dot plot”, this release was formally introduced on January 25, 2012 and has always been done on a quarterly basis since then.  The Fed has changed the way it communicates over the years and we expect that Kevin Warsh will add his own mark in the months ahead.

Primary Market

$44 billion in new debt was priced this week through Wednesday, blowing past dealer estimates of $25bln.  There are two deals pending on Thursday that will add $5.05bln to that number, bringing the weekly total to almost

$50bln.  The biggest deal of the week hit the tape first thing on Monday morning as Nvidia printed $25bln across seven different maturities.  Next week, syndicate desks are looking for $50bln of issuance.  The word on the street is that SpaceX could make its inaugural foray into the investment grade credit markets as soon as next week with a new deal that could total at least $20bln.  The pace of issuance this year remains torrid and is well ahead of 2025, up more than 30% y/y.

Flows

According to LSEG Lipper, for the week ended June 17^th, short and intermediate investment-grade bond funds reported a net inflow of +$5.2bln.  2026 year-to-date net flows into investment grade were +$67.1bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads moved tighter this week but they are a touch softer as we go to print on Friday morning.  The OAS on the Corporate Index closed at 74 on Thursday May 14^th after closing the week prior at 77.  The 10yr Treasury ended last week at 4.35% and it closed at 4.48% on Thursday evening.  The benchmark rate moved higher again on Friday morning as investors expressed disappointment that President Trump’s visit to China did not yield a near term resolution for the closure of the Strait of Hormuz. Through Thursday, the Corporate Bond Index year-to-date total return was +0.03% and the yield to maturity for the index was 5.18%.

Points of Interest

It was a tough week for inflationary pressures.  CPI came in hot, with most measures posting readings that were higher than expectations.  The PPI release also came in meaningfully higher than consensus estimates.  PPI is a measure of inflation at the business or wholesale level, before those prices reach consumers, so it has the potential to act as a leading indicator for CPI and could mean that there are even higher CPI readings coming in the future.  Additionally, investors did not receive the news they were looking for as President Trump went China to meet with President Xi Jinping.  Market participants were anticipating that China would apply more pressure on its Iranian allies to fully reopen the Strait of Hormuz.  Putting it all together, the aforementioned issues, along with a tenuous Iranian ceasefire, have led to an increase in Treasury yields across the entire curve.

In other news, Kevin Warsh was confirmed by the Senate as the new Federal Reserve Chair in a 55-45 vote, the narrowest margin since 1977.  Jerome Powell’s term as Chair ends today and Warsh’s first meeting at the helm will occur on June 17^th (The FOMC does not meet in the month of May).

Primary Market

It was a solid week for primary market issuance during the seasonally busy month of May.  Investment grade rated companies priced more than $52bln in new debt, almost precisely in line with expectations.  Dealers are looking for $40bln next week.  Year-to-date new issue supply stood at $903bln through the end of the week.

Perhaps the most interesting piece of news in the primary market this week was not related to the U.S. domestic bond market.  Alphabet priced the biggest Japanese Yen bond deal on record from a foreign issuer.  The size of the deal was roughly $3.64bln USD.  This is interesting for two reasons.  First, Hyperscalers are increasingly turning to foreign bond markets to raise capital for their AI-related spending in order to diversify their funding sources.  Alphabet has also raised capital in Canadian dollars, British pounds and Swiss francs.  Amazon, Meta, Microsoft and Oracle have also tapped foreign bond markets in recent weeks.  The fact that these companies are raising capital outside of the US market is supportive of their $USD credit spreads and helps to avoid a negative technical of too much AI supply in our market.  The second interesting point is the fact that Alphabet’s deal was the largest ever Yen deal when it was only a mere $3.64bln USD.  This is a decent slug of bonds, no doubt, but would hardly draw any attention at all in the US market.  This points to the depth and breadth of the US market, which is the largest, deepest and most liquid bond market in the world.  Japan is no slouch as the third largest bond market (China is #2), it is just that the US is that much larger and more efficient which is why issuers prefer it for the bulk of their capital raising needs.

Flows

According to LSEG Lipper, for the week ended May 13^th, short and intermediate investment-grade bond funds reported a net inflow of +$4bln.  2026 year-to-date flows into investment grade were +$52.3bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads were modestly tighter on the week through Thursday.  The OAS on the Corporate Index closed at 78 on Thursday April 23^rd after closing the week prior at 79.  The 10yr Treasury ended last week at 4.25% and it closed at 4.32% on Thursday evening. Through Thursday, the Corporate Bond Index year-to-date total return was +0.42% and the yield to maturity for the index was 5.06%.

Points of Interest

The highlight of the week occurred on Tuesday with Federal Reserve Chair nominee Kevin Warsh’s confirmation hearing before the Senate Banking Committee.  Warsh repeatedly stated that he would embrace the role in an independent manner and he reaffirmed his preference for a smaller Fed balance sheet.  The Fed’s use of forward guidance was a topic of discussion; Warsh has been critical of the Fed’s signaling and its focus on PCE as its preferred inflation gauge.  He argues that Fed forecasts can lead to policy errors instead of allowing decisions to be made based on real-time debate in response to changing economic conditions.  On Friday, the DOJ announced that it was dropping the criminal probe of current Fed Chair Powell which may clear the way for Warsh’s confirmation.  Next week is Jerome Powell’s last scheduled meeting as Federal Reserve Chair though he has said he will remain on as chair pro tempore if his successor is not confirmed.  Fed Funds Futures are pricing almost no chance of a rate cut/hike at next week’s meeting.

It was another light week for economic data but things ramp up next week. Thursday in particular is a busy one with personal income/spending, PCE and GDP releases.  Next week is also the height of earnings season in the credit markets with 259 investment grade rated companies reporting.  All eyes will be on the hyperscalers as Alphabet, Amazon, Meta and Microsoft will all release earnings on Wednesday afternoon.

Primary Market

Investment grade companies priced $19.3bln of new debt this week, in line with the low end of dealer estimates.  Syndicate desks are looking for a similar figure next week.  Volume should start to pick up in the first full week of May as many companies will have reported earnings by that time.  Year-to-date new issue supply stood at $751bln through the end of the week.

Flows

According to LSEG Lipper, for the week ended April 22^nd, short and intermediate investment-grade bond funds reported a net inflow of +$1.53bln.  2026 year-to-date flows into investment grade were +$39.7bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads were slightly tighter on the week through Thursday and Friday morning is seeing some positive price action as well.  The OAS on the Corporate Index closed at 79 on Thursday April 16^th after closing the week prior at 80.  For context, the Index OAS is now several basis points better than where it was just prior to the beginning of the Iran conflict.  The 10yr Treasury ended last week at 4.32% and it closed at 4.31% on Thursday evening. Through Thursday, the Corporate Bond Index year-to-date total return was +0.34% and the yield to maturity for the index was 5.04%.

Points of Interest

The big theme of the week was the return of relative calm across risk assets.  The CBOE Volatility Index (VIX) has come off sharply from recent highs.  VIX readings above 30 indicate high volatility while readings under 20 show periods of stability.

With no formal deal in place with Iran we remain somewhat skeptical about the speed with which equity markets have rebounded.  They should certainly be better relative to the lows but the situation remains tenuous at best and higher oil prices will weigh heavily on the consumer and certain sectors of the economy.

It was a light week for economic data with nothing earth shattering from a market movement perspective.  Existing home sales remained unsurprisingly sluggish amid an environment of higher mortgage rates for the past month.  Producer price inflation surprised slightly to the downside but the release had little market impact.  Next week brings a bit more excitement with additional housing data, retail sales, PMI and consumer sentiment data.  Looking further ahead, the next FOMC decision occurs on April 29^th.  As of Friday morning, Fed Funds Futures were pricing a >99% chance of no change in the policy rate at the upcoming meeting.

Primary Market

Subdued interest rate volatility brought issuers off the sidelines this week.  According to data compiled by Bloomberg, 21 companies priced over $57bln of new debt.  The largest banks in the US all posted earnings this week which allowed them to exit blackout periods with a green light to raise capital –banks alone accounted for $36.5bln of this week’s volume.[i]  Next week is expected to have a slower cadence, with syndicate desks estimating $20-$25bln of new supply as corporate issuers continue to work through a busy period for earnings.  Year-to-date new issue supply stood at $731bln through the end of the week.

Flows

According to LSEG Lipper, for the week ended April 15^th, short and intermediate investment-grade bond funds reported a net inflow of +$0.849bln. This comes after two consecutive weeks of outflows, which were the first incidents of negative flows since November 2025.  2026 year-to-date flows into investment grade were +$38.2bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

i Bloomberg, April 17 2026, “US IG OPEN: Bond Sales ON Pause After Big US Banks Boost Volume”

Credit spreads were tighter on the week through Thursday but Friday’s price action is indicating that the market will finish the period unchanged.  The OAS on the Corporate Index closed at 86 on Thursday March 26^th after closing the week prior at 87.  The 10yr Treasury ended last week at 4.38% and it closed at 4.41% on Thursday evening. Through Thursday, the Corporate Bond Index year-to-date total return was -1.20% and the yield to maturity for the index was 5.26%.

Points of Interest

It was another volatile week for risk assets with plenty of headlines to parse and lots of risk reversals depending on the social media post of the day (or minute) regarding Iran.  Equities continued to bear most of the brunt and IG credit was particularly well behaved.  Investment grade credit is lower on the risk spectrum relative to most other assets and higher yields have drawn investor interest which has helped support spreads.  On the economic front, it was a light week for meaningful data.  Next week things ramp up with consumer confidence, retail sales, vehicle sales and then finally the nonfarm payroll report on Friday morning.

Primary Market

New issue volume this week was $28.95bln, in line with the $30bln estimate.  Next week is expected to be light with an estimate of just $10bln in new supply.  Bond and equity markets are closed next Friday in observance of Good Friday.  Year-to-date new issue supply stood at $631bln through the end of the week.

Flows

According to LSEG Lipper, for the week ended March 24^th, short and intermediate investment-grade bond funds reported a net inflow of +$2.9bln. This was the 17^th consecutive week of inflows.  2026 year-to-date flows into investment grade were +$44.1bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

Credit spreads were tighter this week.  The OAS on the Corporate Index closed at 88 on Thursday March 19^th after closing the week prior at 92.  Spreads were quite volatile throughout the period but the price action was downright orderly compared to most risk assets.  Equites are poised to finish lower for the 4^th consecutive week.  The 10yr Treasury ended last week at 4.28% and it closed at 4.25% on Thursday evening. The benchmark rate was sharply higher on Friday and was trading at 4.37% as we went to print on Friday afternoon.  Through Thursday, the Corporate Bond Index year-to-date total return was -0.36% and the yield to maturity for the index was 5.11%.

Points of Interest

Volatility took center stage once again as the war with Iran continued to drag on.  There was extensive damage to energy infrastructure in the middle east this week.  In one particular instance, QatarEnergy’s CEO commented that Iranian attacks had knocked out 17% of Qatar’s liquified natural gas export capacity for least three to five years, threatening supplies to Europe and Asia.[i]  In domestic news, the FOMC rate decision was the highlight of the week.  As expected, the committee left its policy rate unchanged.  Chairman Powell’s presser was interpreted as somewhat hawkish by investors as he showed little conviction regarding the path forward for interest rates. The mere fact that he did not squash the possibility of increasing the policy rate led the market to drastically reprice the path forward.  At the beginning of March, investors were pricing two rate cuts in 2026 while the Fed’s dot plot was calling for one.  Today, the market is pricing zero rate cuts in 2026 while the updated dot plot released on Wednesday was still predicting a single cut.  Bottom line, with the ongoing war, constantly changing tariffs, a tired US labor market and a spike in fuel prices, the path forward is now fraught with uncertainty.  If there is one thing that capital markets do not appreciate it is uncertainty.  This means volatility is here to stay.

Primary Market

New issue volume this week came in at $36.45bln versus projections of $40bln.  All of this supply occurred on Monday and Tuesday as issuers took a pass on Wednesday due to the FOMC and Thursday due to volatility.  Syndicate desks are looking for $30bln next week.  Year-to-date new issue supply stood at $602bln through the end of the week.

Flows

According to LSEG Lipper, for the week ended March 17^th, short and intermediate investment-grade bond funds reported a net inflow of +$4.79bln. This was the 16^th consecutive week of inflows.  2026 year-to-date flows into investment grade were +$41.3bln.

This information is intended solely to report on investment strategies identified by Cincinnati Asset Management. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. Fixed income securities may be sensitive to prevailing interest rates. When rates rise the value generally declines. Past performance is not a guarantee of future results.

[i] Reuters, March 19 2026, “Iran attacks wipe out 17% of Qatar’s LNG capacity for up to five years, QatarEnergy CEO says”