CREDIT DAYBOOK AMERICAS: Corporate Funding Costs Keep Dropping

Funding costs continue to fall across US debt capital markets in the run-up to the Federal Reserve’s policy decision and economics projections on Wednesday.

• High-grade spreads returned to their narrowest reading since 1998 on Monday at 73 basis points, according to a Bloomberg index, while yields hit a fresh 11-month low of 4.71%
  • Meanwhile, junk-bond yields fell four basis points to 6.6%, matching last week’s three-year low, and spreads are their tightest since February
• The moves aren’t just in corporate bonds, with a key measure for mortgage-backed securities posting its smallest premium to Treasuries since 2022
• The reduced borrowing costs ...