Deflation fears meant that November was a phenomenal month for government bonds and investment grade corporate bonds. In local currency terms, US Treasuries returned +5.4% (the best month since November 1981), German government bonds returned +4.0% (the best month since at least 1985) and gilts returned +4.6% (the strongest month since October 1992)
Investment grade corporate bonds also performed well. The sharp drop in government bond yields dominated the fact that credit spreads blew out to levels never previously seen (and that includes the Great Depression). US investment grade corporate bonds had the best month since May 1995, European investment grade had the best month since May 2003 and UK investment grade corporate bonds had the best month since May 2005.
I’m doing a teleconference tomorrow at 10am to update on the two main drivers of bond prices – the outlook for interest rates, and the outlook for credit. You can register here if you want to listen in.