Global interest rates appear to have reached the long awaited inflection point in November, as the unexpected turn of events led to a very brief period of distress in the financial markets followed by improved outlook for US growth driven by the new administrations likely pro-business policies. As would be expected, the prospects of higher interest rates and the likely implementation of inflationary policies in the US put significant price pressure on global fixed income markets, with some of the pain soften by the tightening of credit spreads.

• This month’s special report is on assessing European corporate bond liquidity using dealer quote depth data
• The predominantly floating-rate leveraged loan market outshined the mostly fixed-rate investment grade and high yield corporate bond sectors, returning 0.6% after the US elections.
• The Markit iBoxx € Liquid High Yield Index and Markit iBoxx € Contingent Convertible Index were the only categories to escape the global sell-off in bonds, returning +0.7% and +1.3%, respectively on the month
• The US election results, and potential changes in municipal bond tax benefits and increases in infrastructure spending policies, immediately pressured municipal bond spreads, with the sell-off in longer rates having the most direct impact on muni prices.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.