USIG - Q1 2024 Total Return Gov/Credit Review

2024-04-03 03:20:00 ET

Summary

• After a sharp decline in yield during Q4 2023, Treasury yields rose during Q1 2024.
• We experienced significant increases in 10- and 30-year Treasuries, as they rose 31 bps to 4.19% and 30.6 bps to 4.336%, respectively.
• Spreads on investment-grade corporates and taxable munis continued to grind lower as Treasury rates rose, benefiting our strategy, as we remain overweight those sectors relative to the benchmark.
• We will continue to take a conservative approach to credit while looking to be opportunistic if and when attractive trades become available.

By Daniel Himelberger

After a sharp decline in yield during the fourth quarter of 2023, Treasury yields rose during the first quarter of 2024 as “higher for longer” concerns reentered the market and rate cut expectations declined from six 25-basis point cuts to three. The biggest increase was seen in the 3-year, which rose 38 basis points to 4.39% as of 3/28/2024. We also experienced significant increases in the 10- and 30-year Treasuries, as they rose 31 basis points to 4.19% and 30.6 basis points to 4.336%, respectively. These increases gave us the opportunity to extend our duration to bring our strategy more in line with the benchmark duration. You can see the complete Treasury curve movements for the quarter below....

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