Monthly Fixed Income Market Update: April 2026

MARKET NEWS

• Markets moved through April with a broadly constructive, risk-on tone, shaped by geopolitical developments in the Middle East, mixed inflation signals, and shifting expectations for US monetary policy
  • Oil prices saw some relief following a US-Iran ceasefire announcement and subsequent extension before ending the month higher
• March inflation data was mixed, as CPI grew 3.3% year-over-year, driven primarily by a sharp increase in energy costs, while Core CPI remained more subdued, growing 2.6% year-over-year
• Non-farm payrolls increased by 178k in March, exceeding estimates of 65k, while the unemployment rate declined to 4.3%, partially due to a decline in the labor participation rate
• The Federal Open Market Committee (FOMC) kept rates steady for a third straight meeting, though an unusually high number of dissents highlighted uncertainty around the Fed’s policy stance amid the ongoing conflict in the Middle East
  • While the April meeting marked Jerome Powell’s final one as Fed Chair, he signaled his intention to remain on the FOMC as a governor after his term ends on May 15
• Treasury yields ended the month higher, driven by growing expectations of a Fed rate hike; after bouts of steepening earlier in April, the curve ultimately flattened overall
• Investment-grade (IG) and high-yield (HY) corporate spreads tightened by 11bps and 49bps, respectively, to 78bps and 268bps, marking their lowest levels since the start of the US-Iran conflict
  • Basic Industry and Insurance were among the best performing sectors, while Communications lagged; lower-quality issuers outperformed higher-quality issuers, with CCCs outperforming BBs by 137bps
• IG issuance was robust throughout the month, led by sizable financial and technology deals; supply totaled $178 billion, exceeding expectations and marking the second busiest April on record
  • New issue concessions have averaged 4bps year-to-date, compared to 2025’s average of 3.3bps
• HY borrowers were similarly active, bringing $38 billion to market, driven by center expansion and infrastructure-related bond sales, making it the busiest month since September 2025
• Agency mortgage-backed securities (MBS) outperformed other securitized sectors as interest rate volatility subsided; MBS spreads tightened 4bps to 20bps
• Municipal bonds outperformed Treasuries as muni/Treasury ratios fell across the curve
   

MARKET STATISTICS

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As of 4/30/26. Sources: Bloomberg

Excess returns are the curve-adjusted excess return of a given index relative to a term structure-matched position in Treasuries. This is not a recommendation to purchase or sell the securities mentioned above.

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