Fixed Income (June)
The Federal Reserve held its target rate steady in June, the first meeting led by new Chair Warsh. Despite the hold in rates, the Fed’s dot plot proved to be more hawkish. Core bonds delivered a slight gain for the month.
Credit fared well during June. Continued demand and a solid fundamental backdrop helped high yield bonds deliver a positive return despite a modest rise in spreads.
Falling breakeven rates were a headwind for TIPS as inflation expectations receded during June.