In Credit: The Risk Rally Continues

It has been a rather range-bound period for core government bond markets. This comes in spite of stronger performance from risk markets such as equities and credit. What has changed is the shape of the US yield curve. The 5-30-year curve is the now the steepest in a few years reflecting a mixture of improving economic sentiment as well as the dynamics of supply and demand in the US treasury market. Notably there was an improvement in the employment situation with an ongoing decline in jobless claims.