Investment-grade corporate paper returned 2.7% in in Q1 vs. a 1.42% gain for the MSCI World Index of stocks, the first time debt beat equities since Q2 of 2012. This follows stock gains of 27% last year while bonds fell 1.45%, and a near-universal outlook at the start of the year to rotate out of fixed-income and into equity.
Junk bonds returned 2.86% in Q1.
Helping, of course, is the decline in benchmark Treasury yields, but corporate balance sheets have improved, with at least some of that related to the rollicking stock market narrowing pension fund deficits.
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