Corporate Credit Spreads Continue to Tighten
Prices for safe-haven assets such as U.S. Treasury bonds weakened.
Risk assets continued to trade up across the board last week. The markets were lifted by the rising momentum from the ongoing rebound after markets bottomed out in December as well as better-than-expected economic metrics in the United States and China. With the markets in a risk-on mood, prices for safe-haven assets such as U.S. Treasury bonds weakened, leading to a further rise in interest rates across the yield curve.
In the U.S, the consumer price index rose 1.9% on a year-over-year basis; after excluding food and energy, the CPI rose 2.0% compared with last year, spot on with the Federal Reserve's targeted inflationary rate. The headline producer price index rose slightly faster than the Fed's target, but the core PPI, which excludes food, energy, and trade services, was also in line at a 2.2% year-over-year rate of increase. Jobless claims came in lower than expected and indicated a strong demand for workers. The improvement among economic metrics over the past few weeks has led to a significant increase in the Federal Reserve Bank of Atlanta's GDP Nowcast projection for first-quarter 2019 GDP growth. The Nowcast projection has risen to 2.3% after hitting a low of 0.2% at the beginning of March.