- Rising rates + widening credit spreads = fixed-income losses.
- High yield outperforms investment grade to the downside.
- High-yield outflows set new record in first quarter.
Performance in the fixed-income markets has been decidedly negative across the board in the first quarter of 2018 as the impact from rising interest rates and widening credit spreads have taken their toll. Morningstar’s Core Bond Index, our broadest measure of the fixed-income universe, declined 2% in the first quarter through March 22, driven by the increase in interest rates across the entire yield curve, as well as widening corporate credit spreads.