Q3 2021 Fixed Income Review

Although the performance numbers don’t necessarily reflect it, the bond market experienced a dose of turbulence during the third quarter as an uptick in Delta variant cases and subsequent growth concerns brought out some sellers.

The Treasury bond market was not immune from worries as inflationary concerns remain high and the debt ceiling timeline draws close. U.S. Treasuries were down 1.2% in September, but large gains in July helped propel this index component to a quarterly gain of 9 bps. The benchmark 10-yr Treasury started the quarter at 1.47% and finished September at 1.49%. The index returns to the right reflect some of the larger components of the Bloomberg Aggregate index, which finished 0.05% higher for the quarter without any significant contributors or detractors.

Meanwhile, the Bloomberg Intermediate Govt. /Credit Index finished up at 0.02% and shorter duration indices up about 0.10%. Many market participants take long vacations in the summer and those appear well timed this year, as they did not miss much.

Read the full newsletter here: INVESTMENT OUTLOOK Q3 2021