Monthly Market Snapshot

U.S. corporate bond issuance is poised to break the all-time calendar-year record by mid-November, eclipsing the previous high set in 2020. Elevated capital spending, particularly the rapid build-out of data center infrastructure, has been an important contributor to record issuance.

Source: Refinitiv. As of 10/30/26.

The surge in corporate issuance is adding to an already elevated demand for capital, as corporations compete with the federal government’s significant borrowing needs. This increased competition for capital is one of several factors putting upward pressure on interest rates.

For educational purposes only. Advisory services are offered through Segall Bryant & Hamill, LLC, d/b/a CI SBH Asset Management (“SBH”), a registered investment adviser with the U.S. Securities and Exchange Commission. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of the CI SBH Asset Management Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. One cannot invest directly in an index.

October Recap: Rates Rally, Spreads Widen

  • Treasury yields declined sharply in October, reversing part of the third-quarter increase and supporting positive returns across most fixed income sectors.
  • The U.S. Aggregate Index returned 2.44% in October. Municipals and longer-duration Treasuries generated the strongest returns as interest rates moved lower.
  • Investment grade spreads widened, causing IG corporate credit to underperform Treasuries on a duration-adjusted basis. Communications and technology sector spreads widened the most, reflecting elevated capex and issuance in those sectors.
  • High yield spreads widened during the quarter, particularly among lower-quality credits, though default activity remained low. B-rated bonds outperformed both BBs and CCCs.
  • The Fed left rates unchanged in October following its September rate hike, but resilient economic growth and elevated inflation kept the possibility of additional tightening on the table. Concerns around federal borrowing needs and increased competition for capital remain important drivers of the outlook for longer-term interest rates (see chart on the previous page).

Market Summary

Fixed income markets rebounded in October. Municipal bonds led with a 3.85% return for the month.

YIELDS & RETURNS (%) 1

U.S. Treasury Market

Treasury yields declined across the curve in October, reversing part of the sharp increase experienced during the third quarter. Intermediate maturities rallied the most, with the 5- and 10-year Treasury yields each declining 37 basis points.

TREASURY YIELDS (%) 1

For educational purposes only. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of CI SBH Asset Management Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. One cannot invest directly in an index.

Treasuries generated positive returns across all maturities, with longer-duration securities benefiting the most.

TREASURY RETURNS (%) 1

Investment Grade

The U.S. Aggregate Index returned 2.44% in October as falling interest rates supported most investment grade sectors. Mortgage-backed securities performed well on both an absolute and duration-adjusted basis, while widening credit spreads caused intermediate and long corporates to underperform comparable Treasuries.

INVESTMENT GRADE INDEX & SECTOR RETURNS (%) 1

Investment grade corporate spreads widened in October. The spread moves were slightly greater on the long end.

INVESTMENT GRADE SPREADS (basis points) 1

All IG quality categories generated positive returns in October. Longer-duration AAA securities produced the strongest absolute return at 3.15%, while A-rated bonds posted the best duration-adjusted result.

INVESTMENT GRADE CORPORATE CREDIT QUALITY RETURNS (%) 1

For educational purposes only. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of CI SBH Asset Management Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. One cannot invest directly in an index.

Investment grade spreads widened across every sector in October, with the most pronounced weakness in communications and technology, reflecting elevated issuance and increased capital spending within those sectors.

INVESTMENT GRADE CORPORATE BOND SPREADS BY SECTOR (basis points) 1

High Yield

High yield corporates returned 0.30% in October but underperformed Treasuries on a duration-adjusted basis as credit spreads widened. BB-rated bonds performed best, while CCC-rated bonds were the weakest.

HIGH YIELD SECTOR RETURNS (%) 1

HIGH YIELD OPTION-ADJUSTED SPREADS (OAS) (basis points) 1

High yield spreads widened across most sectors in October, with transportation and communications experiencing the greatest pressure. Spreads in the energy and utilities sectors tightened.

HIGH YIELD CORPORATE BOND SPREADS (OAS) BY SECTOR (basis points) 1

For educational purposes only. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of CI SBH Asset Management Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. One cannot invest directly in an index.

The high yield default rate moved moderately higher in the month.

HIGH YIELD DEFAULT RATES 2

Municipals & Other

Municipal bonds rallied sharply in October as yields declined across maturities and rating categories. Intermediate and long-duration munis outperformed short duration munis.

MAJOR MUNICIPAL BOND INDEX RETURNS (%) 1

MUNICIPAL YIELDS BY RATING CATEGORY AND MATURITY (%) 1

AA MUNICIPALS – HYPOTHETICAL AFTER-TAX YIELDS BY EFFECTIVE TAX RATE (%) 3

Results were mixed across other fixed income sectors in October. Global investment grade government bonds performed the best, while emerging-market debt and leveraged loans posted modest positive returns.

OTHER SECTOR RETURNS (%) 1,4

For educational purposes only. This update provides an overview of certain broad-based Fixed Income benchmarks and does not include performance of the CI SBH Asset Management Fixed Income styles. Past performance cannot guarantee future results. All investments involve risk, including the possible loss of capital. One cannot invest directly in an index. All opinions expressed in this material are solely the opinions of SBH. You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this material does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and SBH is not under any obligation to update or correct any information provided in this material.

 

1Source: Bloomberg.

 

2Source: Bank of America Merrill Lynch.

 

3Hypothetical yields are calculated as the AA municipal yield divided by (1-tax rate). Actual tax-adjusted yields will depend on individual tax circumstances.

 

4Source: Standard & Poor’s.

Bond Rating Categories

Standard & Poor’s Ratings Group

AAA An obligation rated “AAA” has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong.

 

AA An obligation rated “AA” differs from the highest rated obligations only in small degree. The obligor’s capacity to meet its financial commitment on the obligation is very strong.

 

A An obligation rated “A” is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher- rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.

 

BBB An obligation rated “BBB” exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.

 

Obligations rated “BB,” “B,” “CCC,” “CC” and “C” are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and “C” the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.

 

BB An obligation rated “BB” is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor’s inadequate capacity to meet its financial commitment on the obligation.

 

B An obligation rated “B” is more vulnerable to nonpayment than obligations rated “BB,” but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation.

 

CCC An obligation rated “CCC” is currently vulnerable to nonpayment and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

 

CC An obligation rated “CC” is currently highly vulnerable to nonpayment.

 

C A subordinated debt obligation rated “C” is currently highly vulnerable to nonpayment. The “C” rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued.

 

D An obligation rated “D” is in payment default. The “D” rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payment will be made during such grace period. The “D” rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.