C8 Weekly Bulletin: US Earnings and the Corporate Balance Sheet

The near-term trajectory for corporate balance sheets is in particular focus as market repricing has substantially boosted returns from short-maturity credit exposure. The iBoxx $ Non-Financials BBB yield for the 1-3yr sector, for example, has climbed from 1.5% at start-year to 5.6%, and the pick-up from extending exposure beyond this (into 7-10yr) has been halved. While CTA/ trend strategies perform particularly well amidst major economic/ geopolitical shocks, short tenor corporate bond holdings may now provide steady –  arguably attractive –  returns if we see more stable outcomes for the US economy.

Rates Products on C8 Studio

The rates products on the C8 platform are very diverse, ranging from cross-asset allocation to direct bond investment portfolios based on the S&P iBoxx bond indices. Selected ETFs with shorter fixed rate corporate exposure are shown in the table below (note that issuers in USD may be from outside the US). Directly invested bond portfolios may also have some advantages in this context as they allow a more precise positioning for specific credit and duration risks. As an illustrative example, a small bond portfolio of just the 2025/26 issues in the iBoxx USD Liquid IG Top 30 index trades on a 5.1% yield.

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