That said, 2024 was a decent year for Asiadollar credit with total returns of 3.7% and 15.1% respectively for IG and HY, respectively. Meanwhile, spreads tightened by 27 bps to 78 bps for IG and 364 bps to 417 bps for HY y-o-y, respectively.
Asiadollar credit spreads exhibited disparity in December, with Bloomberg Asia USD Investment Grade (IG) spreads widening by 4 basis points (bps) month-on-month to 78 bps, while Bloomberg Asia USD High Yield (HY) spread tightened 41 bps m-o-m to 417 bps as at time of writing.
The spreads widening could be partially due to the US Federal Reserve Meeting (FOMC) in December, in which Fed Chair Jerome Powell indicated a slower pace of rate cuts in 2025 after issuing a 25 bps rate cut, with investors continuing the search for all in yields while ignoring heightened inflation worries. The US Federal Reserve revised the 2025 personal consumption expenditures (PCE) inflation forecast to 2.5% from 2.1% and the 2025 core PCE inflation forecast to 2.5% from 2.2%.
