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Apple on Monday said it had sold USD 4.5bn in bonds, with order books showing some USD 10bn in demand. General Motors said it was pricing USD 2bn in senior unsecured fixed rate notes, which will close on Tuesday. Seven other issuers are also seeking primary issuance, which could bring total new US IG primary offerings to nearly USD 40bn this week. This rise in supply comes as credit spreads narrow from their post-“Liberation Day” wides, and ahead of the upcoming Fed decision on Wednesday. After a tumultuous April, during which the 10-year US Treasury yield moved in a 70-basis-point (bps) range—the largest since the Silicon Valley Bank crisis in March 2023—the net change in the 10-year yield by month-end was a mere 3bps.
CIO view: While we expect the US economy to slow and tariff uncertainty to weigh on activity, we continue to believe a US recession will be avoided. The modest net change in the 10-year Treasury yield last month underscores the importance in not getting caught up in intra-day volatility, in our view. In our global strategy, we continue to rate high grade and investment grade bonds as Attractive. We anticipate mid-single-digit returns for medium-duration quality bonds in US dollar terms over the next 12 months, coming from both yield and capital appreciation as rates come down. Investment grade bonds are also appealing from a risk management and diversification perspective, in our view. We see an opportunity for investors to switch cash into high-quality bonds to lock in yields, dampen overall portfolio volatility, and provide additional robust income.
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