Monthly performance, maturity, yield and duration of the iBoxx ALBI, iBoxx ABF and iBoxx SGD Indices.
Among the headlines in May was the U.S. debt ceiling and what it meant if no agreement was struck in Congress ahead of the June 5 deadline. The impact of a default on U.S. government debt would likely be unthinkable, possibly resulting in turmoil in financial markets and significant job losses across markets. On June 3, U.S. President Biden signed a bill that would suspend the debt ceiling to avert a default.
Meanwhile, the FOMC will meet again on June 13 and 14 to discuss the next move on the federal funds rate. Expectations from market analysts were mixed. After the FOMC meeting in May, the consensus was that we may have witnessed the final rate hike. However, strong employment data, persistent core inflation and general resilience in the economy may have altered some analyst expectations.
In May, the S&P 500® ended the month relatively flat, with a return of 0.25% after recovering from losses earlier in the month. At the same time, U.S. Treasuries, as represented by the iBoxx $ Treasuries, lost 1.25%.
The iBoxx Asian Local Bond Index (ALBI) (unhedged in USD) returned -1.30% in May, with mixed performance from the underlying markets.
Among the top gainers (in local currency terms) were Indonesia (up 1.82%), India (up 1.35%) and the Philippines (up 1.13%). South Korea (down 1.35%) and Hong Kong (down 0.68%) were the worst performers this month, as FX gains against the dollar were outweighed by capital losses.
The largest gains and losses were concentrated in the long end of the curve. This month, the Philippines 10+ and Indonesia 10+ posted the highest returns, at 2.50% and 2.33%, respectively, while South Korea 10+ (down 3.22%) and Hong Kong 10+ (down 2.36%) recorded the largest declines.
As of the end of May, the overall index yield was unchanged at 3.92%. India remained the highest yielding bond market in the index, offering 7.09%, while China Onshore (2.81%) replaced Thailand as the lowest yielding market.
