The Resiliency of Corporate Bonds

April 23, 2024 — The last few weeks have seen the first true “risk off” tone this year, with the S&P 500 experiencing a 3% drawdown last week – the largest drawdown for the index since the Silicon Valley Bank crisis in March 2023. However, corporate credit spreads remain extremely well behaved, with the investment grade corporate spread widening by only 3 basis points on the week and high yield spreads rising by 13 basis points. The all-in yield of corporate bonds is contributing to the stable demand and resiliency of corporates, which will continue until fundamentals weaken markedly through downside surprises in growth and earnings data.