Corporate bonds generated positive returns over February, outperforming government bonds as risk markets generally advanced. Risk appetite was bolstered by hopes that the US and China were close to resolving their ongoing trade dispute, as President Trump deferred a further rise in tariffs on Chinese imports and cited progress in bilateral trade negotiations. Comments from Fed officials continued to point to accommodative policy amid worries over slowing global economic growth. Minutes released from the Fed’s January policy meeting signalled a willingness to end balance sheet reduction in the second half of 2019. While US monthly economic data was mixed, the eurozone continued its run of weak economic data. New issuance worth $11.5bn from tobacco group Altria was met with strong demand from bond investors.
*Source: Lipper to 31 December 2018, total return. Indices rebased to zero at 30 November 2018.
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