Last month, the Bloomberg U.S. Corporate Bond index returned 3.2%. This was the largest monthly gain in two years, when U.S. corporate investment-grade securities returned 3.3% in July 2020.
However, the positive performance has not carried over into August with the index losing 0.7%.
The corporate investment-grade option-adjusted spread stood at 143 basis points over Treasuries on Tuesday, about a 50-basis-point increase since the end of 2021. While the current spread has narrowed since the end of June's 155 basis points, it is the widest since mid-2020 at the onset of the pandemic. At the end of March 2020, the spread rose to 272 basis points, more than double the prior month's 122 basis points.
Investment-grade securities had a yield to worst of 4.5% as of Tuesday's close, nearly double the 2.33% at the end of last year.
