Top-rated corporate bonds generated a negative 15% return during the Federal Reserve's rate-hiking cycle in 2022, suffering from wider credit spreads and rising yields.
Analysts suggest corporate bonds face lower vulnerability this cycle due to a slower pace of anticipated Federal Reserve tightening and existing corporate familiarity with elevated rates.
Decreased debt issuance from major artificial intelligence hyperscalers over the next two years could further help stabilize investment-grade bond spreads.