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Long duration credit update for the first quarter of 2019
Greg Garrett
Fixed Income Investment Director
May 30, 2019

After a significant widening of spreads in the fourth quarter, credit markets rebounded along with equities and other risk assets during the first quarter. A key catalyst of positive sentiment was a more accommodative stance from the U.S. Federal Reserve. This drove U.S. Treasury yields lower across the yield curve and pushed the 10-year Treasury rate below the fed funds rate – a condition that has preceded each of the last three recessions by one to three years. Long-dated investment-grade credit spreads narrowed by 27 basis points (bps) to 173bps during the quarter. The spread tightening combined with lower Treasury yields cut the long corporate credit yield to 4.41% from 4.91%.


Option adjusted spread and yield to worst calculated for the Bloomberg Barclays Long U.S. Corporate Index as of March 31, 2019. Sources: Barclays, Bloomberg Index Services Ltd., Thomson Reuters Datastream.

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Greg Garrett is a fixed income investment director at Capital Group. He has 36 years of investment industry experience (as of 12/31/2023). He holds a bachelor’s degree in finance from the University of Arizona. He also holds the Chartered Financial Analyst® designation and is a member of the New York Society of Security Analysts. 

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