Monthly Market Monitor

November 2025

Macro

In October, the Federal Open Market Committee (FOMC) cut the fed funds rate by 25 basis points (bps). Two committee members dissented from the policy decision; one FOMC member preferred a larger, 50-bp cut, while the other preferred that the Committee make no change to the rate. Additionally, the FOMC announced that beginning on December 1, it will end its balance-sheet runoff program and reinvest holdings into U.S. Treasury bills.

The delayed September Consumer Price Index release showed that both headline and core inflation rose 3% year over year, slightly lower than expected. While inflation within some core goods categories was firm, there were no categories that moved substantially higher from previous months.

Credit

New issuance volume remained very active in October, and $34 billion in new issuance came across 13 deals on just the first trading day of November. Mega-capitalization technology firms have been active issuers this fall, with funding needs driven by artificial intelligence-fueled demand for data center expansion.

In October, investment grade spreads widened by 4 bps to 74 bps, resulting in a negative (-21 bp) excess return. BB-rated bonds outperformed BBB-rated bonds, amid subdued high yield issuance and easing credit concerns, despite isolated negative events in lower-rated names.

Structured

Nearly $40 billion in asset-backed securities were issued in October — marking one of the largest-volume months so far in 2025. Excess returns were slightly negative (-2 bps) amid rising subprime delinquencies and widening spreads between high- and low-quality tranches, reflecting selective market caution.

Mortgage-backed securities delivered strong performance in October with a 28-bp excess return. Declining implied volatility, coupled with continued Federal Reserve easing, supported the rally.

Chart of the Month

Bloomberg US Aggregate Bond Index (Agg) vs. Bloomberg US Credit Index During Government Shutdown Periods

Recent government shutdowns have had little effect on fixed income markets; returns for the Bloomberg Agg look similar to those of the prior shutdown period, while implied volatility has declined.
During October 2025, excess returns were negative as valuations remain historically expensive.

As of 10/31/2025. Source: Bloomberg L.P. View accessible version of chart.

Market Data

Yields	YTM %	MTD Change	QTD Change	YTD Change
3-Mo UST	3.82	-0.12	-0.12	-0.51
2-Yr UST	3.58	-0.03	-0.03	-0.67
5-Yr UST	3.69	-0.05	-0.05	-0.70
10-Yr UST	4.08	-0.07	-0.07	-0.49
30-Yr UST	4.65	-0.08	-0.08	-0.13

Risk Premia	OAS (bps)	MTD Change	QTD Change	YTD Change
Investment Grade Credit	74	4	4	-3
Asset-Backed Securities	55	6	6	11
High Yield	281	14	14	-6

As of 10/31/2025. Source: Bloomberg L.P.

Bloomberg Sector/Index Performance (USD)

	Duration (yrs.)	MTD Excess Return (%)	YTD Excess Return (%)	MTD Total Return (%)	YTD Total Return (%)
Sector
Investment Grade Credit	6.66	-0.21	1.05	0.44	7.37
Mortgage-Backed Securities	5.60	0.26	1.25	0.86	7.68
Asset-Backed Securities	2.69	-0.02	0.36	0.38	5.02
High Yield	2.76	-0.24	2.16	0.16	7.39

	Duration (yrs.)	MTD Excess Return (%)	YTD Excess Return (%)	MTD Total Return (%)	YTD Total Return (%)
Index
1-3-Yr Government Credit	1.78	0.00	0.18	0.34	4.49
Intermediate Government/Credit	3.68	-0.02	0.37	0.43	6.16
U.S. Aggregate	5.95	0.00	0.61	0.62	6.80

As of 10/31/2025. Source: Bloomberg L.P.

Bloomberg US Aggregate Bond Index (Agg) vs. Bloomberg US Credit Index During Government Shutdown Periods

Bond Index Returns During US Government Shutdowns
Government Shutdown Period	BBG US Agg Index (Total Return)	US Credit Index (Excess Return)
September 30, 2013 to October 17, 2013	+0.46%	+0.65%
January 19, 2018 to January 22, 2018	-0.16%	-0.04%
December 21, 2018 to January 25, 2019	+0.68%	+1.04%
September 30, 2025 to Present	+0.56%	-0.20%

Notes:

BBG US Agg Index represents the Bloomberg US Aggregate Bond Index (Total Return)
US Credit Index represents the US Credit Index (Excess Return)
All values are percentage returns during the specified government shutdown periods
Positive values are shown in green, negative values in red for easier interpretation

Important Disclosures

This publication is for informational purposes only. Information contained herein is believed to be accurate, but has not been verified and cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice or a forecast or guarantee of future results. To the extent specific securities are referenced herein, they have been selected on an objective basis to illustrate the views expressed in the commentary. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. The securities identified do not represent all of the securities purchased, sold or recommended and it should not be assumed that any listed securities were or will prove to be profitable. Past performance is no guarantee of future results.

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