Stay tuned
US ten-year Treasuries are yielding around 4.30% and German ten-year Bunds are at around 2.87%. The big picture is that they have been trading in an obvious, broad range since the summer of 2025. Within that range you can see a slight uptick, but it is not a big story.
The focus of market participants has been on currency and commodity movements, with no direct trigger affecting government bond or corporate credit markets. Investment (high) grade corporate credit spreads became richer and hit post-financial crisis lows on a continued and slowly strengthening move. We do not see a significant correction-risk here. A further credit-risk spread tightening could take place if more risk correction becomes priced-in to equities and commodities. In this way, money could be parked temporarily within the high-quality part of corporate credits. Further cuts by the Federal Reserve could, of course, help.
This year started with a good stream of new issuance, and more is expected. Investors need to be very selective when buying. More than USD 17.7 billion of US tech company loans within a Bloomberg index dropped to distressed trading levels during the past four weeks. It is the largest amount since October 2022, according to Bloomberg. It exposes that there are indeed risks within bond markets. Currently, however, the drop is due to specific drivers within certain sectors, which is not impacting the overall corporate credit market.