Global corporate bonds underperformed the government bond segment over December as yield premiums for credit widened. Capital markets experienced increased volatility and risk aversion over the month. The energy sector was hit by a continued fall in the price of crude on worries over a glut in supply and the outlook for demand. A partial inversion of the US yield curve signalled concerns over the outlook for the US economy, while there was also a deterioration in US economic survey data. The Federal Reserve raised interest rates by 0.25% to 2.5%, projecting two further rate hikes for 2019. Eurozone economic data continued its lacklustre run, though the European Central Bank ended its bond-buying programme in December as expected. US and eurozone headline inflation were pushed down by falling oil prices. New issuance activity was relatively weak.
*Source: Lipper to 31 December 2018, total return. Indices rebased to zero at 30 November 2018.
FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.