Monthly Bond Commentary - July 2026

Corporate activity has diverged from the typical summer lull, with 67% more issuance of USD IG corporate bonds in August 2026 than the trailing 10-year August average. Equity capital markets activity has been similarly frenetic. Notable merger talks include AstraZeneca's $120bn+ proposed takeover of flailing rival Bristol-Myers and Banca Monte dei Piaschi (MPS) pursuing Banco BPM and Banca Generali for a combined €34bn to fend off Intesa Sanpaolo which began pursing MPS in June.

This level of issuance, especially at the 10-year tenor and longer, contributed to pushing spreads wider from the start of the third quarter. However, the more impactful move is the crowding out of investors at the long end of the Treasury curve. Treasury yields, facing greater competition for investors at 30-year maturities, have risen steadily in recent months. Treasury secretary Scott Bessent (in his own words "the nation's top bond salesman") announced last week the Treasury Department would increase the purchase size of long-dated bonds - financed with Tbills - in order to improve liquidity in long-dated bonds. In our view this will have a minimal impact on the medium- to longer-term trend of a steepening yield curve, but we could see a rally in the coming weeks into the fourth quarter.