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Bond Market News
US Treasury Short End Curve up by 2-4bp
August 24, 2026
US Treasury yields bear-flattened with short-end of the curve up by 2-4bp while long-end of the curve held steady. Markets are set to closely watch Fed Chairman Kevin Warsh’s keynote address on Friday at the Jackson Hole symposium. On the data front, S&P Global US composite PMI for July came-in at 56.0, higher than expectations of 54.0 and prior week’s 54.5 print. Separately, Minneapolis Fed President Kashkari played down concerns over elevated Treasury yields, stating, “There’s every indication that the US Treasury market is functioning as it should.” Additionally, US-Canada trade talks broke down over the weekend, with both countries announcing tariffs.
Looking at equity markets, the S&P and Nasdaq both rose by 0.4%. US IG CDS spreads tightened by 0.7bp, while HY CDS spreads tightened by 2.3bp. European equity markets also ended higher. European IG CDS spreads were 0.5bp tighter, and Crossover spreads tightened by 2.2bp. Asian equity markets have opened broadly lower this morning. Asia ex-Japan CDS spreads tightened by 0.9bp.
Rating Changes
- Kazakhstan Upgraded To ‘BBB/A-2’ On Resilient Economic Growth And Fiscal Effort; Outlook Stable
- Trident Energy L.P. Upgraded To ‘B’ Amid Strong Pricing Environment; Outlook Stable
- Corporacion Inmobiliaria Vesta Upgraded To ‘BBB’ On Solid Performance And Prudent Growth Strategy; Outlook Stable
- Fitch Downgrades Cox’s Ratings; Affirms Charter’s Ratings; Resolves RW
Term of the Day: Carry Trades
Carry trades are a popular trading strategy where an investor borrows money from a country with low interest rates (and a weaker currency) and invests the money in another country’s asset with a higher interest rate. Historically, a famous example has been the Japanese yen-funded carry trade. This was mainly owing to the zero-to-negative interest rates in Japan for the better part of two decades, and bets that rates there would remain at rock bottom levels. In this case, investors globally and even locally would borrow at low interest rates in Japan and invest the money in overseas equities and bonds like the US stock market. Carry trades typically work well when central bank policy certainty is high and expectations are for low market volatility.
Talking Heads
On Juicy Yields Draw Junk Bond ‘Tourists’ to High-Grade AI Debt
Steven Schweitzer, Advent Capital Management
“We’re seeing high-yield investors become tourists in investment-grade technology debt…. When you can buy a fortress balance sheet at a yield and a spread that looks like a double B, it’s hard not to visit.”
Andrew Keches, Barclays
“There’s a big question every time you’re underwriting a new deal of how much more is behind that, so I think investors are simply just asking for more to feel comfortable underwriting these bonds today”
On Chinese Easing Hopes Revive With Economy Growing 4% – Goldman Sachs
“July’s growth deceleration is more concerning than April’s because it came from a lower starting point and impacted areas that had previously looked resilient… Our conversations with traders and investors suggest that market expectations of monetary policy easing increased somewhat.”
Alejo Czerwonko, UBS Global Wealth Management
“We expect positive total returns for EM currencies over the next 12 months — and interest-rate carry is likely to be the main driver of returns following the significant spot appreciation seen in recent quarters”.
Top Gainers and Losers- 24-Aug-26*
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