Monthly Market Monitor

April 2024

Macro

The Federal Reserve (Fed) held rates steady at the March 20, 2024, Federal Open Market Committee (FOMC) meeting, but continued to suggest policy rate easing later this year is likely.

The FOMC’s Summary of Economic Projections for 2024 illustrated a substantial increase in GDP expectations and forecasted inflation to persist above the Fed’s 2% policy objective for the balance of the year.

U.S. Treasury yields drifted modestly lower in the days following the meeting, ultimately resulting in the lowest level of interest rate volatility, as measured by the ICE BofAML MOVE Index, in approximately two years.

Credit

Another active month in primary markets resulted in more than $500 billion in total first quarter issuance, a record pace to start the year.

Despite the record pace of supply, credit spreads compressed 5 basis points (bps), generating positive excess returns for the sector.

The Financials sub-sector outperformed for the first quarter, as spreads compressed 7 bps. Valuations are now more in line with other sub-sectors, after languishing for much of 2023 following the regional banking crisis.

Structured

Asset-backed (ABS) issuance remained robust in March and, like recent months, was well-absorbed by investors.

Mortgage-backed securities (MBS) had solid performance in March, which helped offset a weak start to the year. Nonetheless, MBS stands out as the lone sector with negative excess returns year to date.

Chart of the Month:1Q Corporate Issuance Total Volume & Deal Count

Chart 1

The robust corporate issuance was well received by investors as many deals were well over-subscribed, allowing for spread compression despite relentless supply.
Unsurprisingly, new issue concessions were relatively sparse as corporate borrowers capitalized on the favorable environment.

As of 3/31/2024. Source: Bloomberg L.P.

Market Data

Chart 2

As of 3/31/2024. Source: Bloomberg L.P.

Bloomberg Sector/Index Performance (USD)

As of 3/31/2024. Source: Bloomberg L.P.

Important Disclosures

This publication is for informational purposes only. Information contained herein is believed to be accurate, but has not been verified and cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice or a forecast or guarantee of future results. To the extent specific securities are referenced herein, they have been selected on an objective basis to illustrate the views expressed in the commentary. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. The securities identified do not represent all of the securities purchased, sold or recommended and it should not be assumed that any listed securities were or will prove to be profitable. Past performance is no guarantee of future results.

Indices and/or Benchmarks Definitions

PNC Capital Advisors, LLC is a wholly-owned subsidiary of PNC Bank, National Association, which is a Member FDIC, and an indirect subsidiary of The PNC Financial Services Group, Inc. serving institutional clients. PNC Capital Advisors› strategies and the investment risks and advisory fees associated with each strategy can be found within Part 2A of the firm's Form ADV.

PNC Capital Advisors, LLC claims compliance with the Global Investment Performance Standards (GIPS®). A list of composite descriptions for PNC Capital Advisors, LLC and/or a presentation that complies with the GIPS® standards are available upon request.

Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value.
©2024 The PNC Financial Services Group, Inc. All rights reserved.

Back to Insights