Daily Insights

The U.S. debt binge.U.S. bond bulls are winning in the global search foryield. Negative-yielding debt has climbed to $10.4 trillion, its highest point since September 2016. At the same time, the 10-yearTreasuryyield fell 31 basis points (0.31%) in March as prices jumped, and theBloomberg Barclays Aggregate Bond Indexnotched its best monthly performance in four years.International demand has played a pivotal role in fixed income’s recent strength, as we’ll explain later today on theLPL Research blog.

Corporate bonds surge. Fixed income’s strength was most apparent in U.S. corporate bonds, which just posted their best quarter since the beginning of the economic expansion. Investment-grade debt, represented by theBloomberg Barclays U.S. Corporate Total Return Index, climbed 5.1% in the first quarter, while high yield debt, represented by theBloomberg Barclays U.S. Corporate High Yield Total Return Index, rose 7.3%.

Steepening. It’s been a year of flattening for the U.S. yield curve so far, but yesterday’s jump in longer-term yields was a promising sign. On Monday, the spread between the 3-month and 10-year Treasury yields closed at 12basis points(0.12%) amid encouraging ChinesePMIdata. The spread between the 2-year and the 10-year Treasury yield also climbed to 17 basis points (0.17%), its highest point in nearly a month.Yield curveinversion has created a lot of buzz lately, as short-term rates fall below longer-term rates in a move that has preceded each of the last nine recessions. We’re monitoring the shape of the curve, but we aren’t concerned about the inversion yet, as the spread between the 3-month and 10-year yields has become much more predictive of a recession at -50 basis points (-0.50%).

NEWMarket Signalspodcast. Inthis week’s podcast, strategists Ryan Detrick and Jeff Buchbinder discuss four factors that could affect financial markets through the remainder of 2019 and four that could affect the overall economy. Subscribe to the freeMarket Signalspodcast series oniTunes,Google Play,Spotify, or wherever you get your podcasts!

Click Here for our detailed Weekly Economic Calendar

Tuesday

• Durable Goods Orders(Preliminary, MoM Feb)
• EurozonePPIReport (Feb)
• Nikkei Japan CompositePMI(Mar)
• Caixin China Composite PMI (Mar)
• Caixin China Services PMI (Mar)

Wednesday

• ADP Employment Report (Mar)
• Markit US ServicesPMI(Mar)
• Markit US Composite PMI (Mar)
• ISM Non-Manufacturing Index (Mar)
• Markit/BME Germany Composite PMI (Mar)
• Markit Eurozone Composite PMI (Mar)
• EurozoneRetail Sales(Feb)

Thursday

• InitialJobless Claims(Mar 30)

Friday

• Nonfarm Payrolls (Mar)
• Unemployment Rate(Mar)
• JapanLeading Index(Preliminary Feb)
• Japan Coincident Index (Preliminary, Feb)
• Germany Industrial Production (Feb)

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Index data obtained via FactSet

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