Duration & Credit Pulse

Week Ending January 3, 2025

Macro Snapshot
• Rates: 10‑year U.S. Treasury ↓ 3 bp to 4.60 %
• Credit: IG OAS +2 bp → 74 bp; HY OAS –8 bp → 279 bp
• Equities: S&P 500 –0.5 % for the week
• Geo: 119th Congress convened on January 3; renewed tariff and defense‑spending debates could lift inflation expectations

Duration Dashboard

Maturity	December 27, 2024	January 3, 2025	Δ (bp)
2‑Yr	4.33 %	4.28 %	– 5
5‑Yr	4.46 %	4.41 %	– 5
10‑Yr	4.63 %	4.60 %	– 3
30‑Yr	4.82 %	4.81 %	– 1

A modest bull‑flattening began 2025 as thin liquidity and year‑end pension rebalancing nudged shorter maturities marginally lower while long‑end yields held steady.

Credit Pulse

Metric	December 27, 2024	January 3, 2025	Δ (bp)
IG OAS	72 bp	74 bp	+ 2
HY OAS	287 bp	279 bp	– 8
CBOE VIX	15.95	16.13	+ 0.18

Investment‑grade spreads widened modestly amid early‑January primary issuance, while high‑yield spreads tightened sharply on equity‑led gains and scarce default headlines.

U.S. GeoFocus – New Congress, New Fiscal Signals

The 119th Congress convened on January 3 with a slim majority in both chambers. Lawmakers immediately revisited broad import‑tariff proposals and defense‑spending increases, both of which risk elevating inflation expectations and term premiums across the curve. Fixed‑income desks will be watching committee hearings closely for clues on new Treasury supply and potential shifts in fiscal policy.

What We’re Parsing Next Week

• Dec FOMC minutes (Jan 7, 2025): Will minutes push back on market pricing of early-rate cuts?
• Dec CPI (Jan 10, 2025): Could a hotter‑than‑expected core print reverse this week’s front‑end rally?
• IG new‑issue calendar: Will issuers front‑load supply ahead of the inauguration‑week blackout?

Further Learning

Video – “Retirement Paycheck 101: Turning Bonds into Monthly Income”