Allocation Update
Fixed Income Monthly
By Crit Thomas, CFA, CAIA, Erik M. Aarts, CIMA, Tim Paulin, CFA
Spreads are Tight: Corporate credit spreads are near their tightest levels in over a decade. While strong fundamentals support this, waning confidence in Treasuries may also be at play. The AAA corporate index yield trades at only a slight premium to Treasury yields of similar maturity today, with some short-term corporate yields trading at negative spreads. By contrast, ABS, MBS, and CMBS spreads remain closer to fair value, making them attractive alternatives.