Investment Grade Quarterly Update – April 2024

Following the aggressive rates rally at the end of 2023, Q1 saw notable gains, with inflation surpassing expectations. Johnathan Owen, Portfolio Management, highlights a more promising inflation outlook and its implications for the Investment Grade team. 

Key takeaways: 

• Inflation trends: Inflation in the Eurozone and the UK remained more orderly compared to the US
• Rate cuts: Markets expect rate cuts from the Federal Reserve (Fed), Bank of England (BoE) and European Central Bank (ECB), with the ECB first to begin their cutting cycle in June
• Labour market: Unemployment in the US ticked up to 3.9%, yet the labour market remains tight
• Yields: Yields in investment grade continue to look attractive, strong positive annual returns are possible even in a scenario where rates and credit spreads rise