JPMorgan: Demand for high-grade foreign currency bonds in the U.S. has risen to a year-to-date high.

A research report from JPMorgan on Tuesday indicated that foreign investors' appeal for U.S. investment-grade corporate bonds has reached its highest level since April 2025. Strategists, including Nathaniel Rosenbaum, noted that the index tracking the attractiveness of U.S. dollar-denominated high-grade bonds rose by 12 basis points week-on-week to 61 basis points, the highest value since April last year. This change stemmed from a decline in hedging costs for all currencies in Europe, the Middle East, and Africa, as well as for most currencies in the Asia-Pacific region, which averaged a decrease of 10.4 basis points. After the latest Federal Reserve meeting, the market had already priced in expectations for short-term interest rate hikes, leading to a decline in short-term dollar interest rates. The yields on U.S. dollar high-grade bonds also edged up by 1.4 basis points, further enhancing their attractiveness to foreign investors. For the first time since April 2025, the yield spread on short-term bonds for Japanese investors turned positive, increasing by 13 basis points, while the yield spread on 10-year bonds improved by 16 basis points.