2024 Fixed Income Market Review: High-Yield Bonds Lead the Way

In the fixed income space, the strongest performances of 2024 have been seen in the high-yield bond sector.

High-yield bonds indeed emerged as the best-performing asset class, driven by a potent mix of elevated all-in yields and narrowing credit spreads. The Markit iBoxx USD Liquid High Yield Capped Total Return Index gained 7.35% while the Markit iBoxx EUR Liquid High Yield Total Return Index added 6.88%.

On the government bond side, the results were less impressive. While the 10-year yield on Italian Treasuries declined by 24 basis points over the year, the 10-year yields on German, French and U.S. government bonds increased by 34, 60 and 70 basis points, respectively. A still solid labor market and stubbornly high inflation in the US lifted Treasury yields and boosted demand for the greenback. In France, the large budgetary slippage led to an expansion of the spread between the OAT and the Bund.

Overall, longer-duration investment grade credit underperformed against backdrop of rising government bond yields. The Bloomberg Global Aggregate Corporate Bond Total Return Index in USD barely managed a gain of 1.10% in 2024.

Lastly, emerging market debt in local currencies suffered from the strong dollar, as evidenced by the Bloomberg EM Local Currency Core Net Total Return Index, which declined by 1.99%.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.