How big is the US fixed income market?
The U.S. fixed-income markets are the largest in the world, comprising 41.3% of the $122.6 trillion of securities outstanding across the globe, or $50.6 trillion (as of 2Q22). This is 2.2x the next largest market, the EU.
Outstanding (as of 4Q21) $52.9 trillion, +5.5% Y/Y.
Research Quarterly: Fixed Income - Outstanding
The U.S. fixed income markets are the largest in the world, comprising 39.3% of the $138.6 trillion securities outstanding across the globe, or $54.5 trillion (as …
Fixed-income markets include not only publicly traded securities, such as commercial paper, notes, and bonds, but also non-publicly traded loans. Although they usually attract less attention than equity markets, fixed-income markets are more than three times the size of global equity markets.
U.S. market and indices
U.S. high-yield bonds outstanding as of the first quarter of 2021 are estimated to be about $1.7 trillion, comprising about 16% of the U.S. corporate bond market, which totals $10.7 trillion. New issuances amounted to $435 billion (~$505 billion in 2023) in 2020.
The U.S. fixed income markets are the largest in the world, comprising 39.3% of the $138.6 trillion securities outstanding across the globe, or $54.5 trillion (as of 3Q23). This is 2.2x the next largest market, the EU.
Some sectors appeal more to institutional investors, such as banks and pension funds. Others, including the municipal bond market, attract more retail investors. The global fixed-income market was worth over $122.6 trillion as of 2Q22.
Data as of Q2 2023. Numbers may not total 100 due to rounding. Today, U.S. equity markets total over $46.2 trillion in market capitalization. Compared to other rich nations, U.S. stocks have often outperformed over the last several decades.
Fitch Ratings estimates $759 billion, or 14%, of the $5.6 trillion U.S. investment-grade bond market will mature in 2024 and 2025.
Marketweight refers to the value rating given to a fixed-income instrument if it's credit spread is aligned with market expectations.
How big is the US bond market vs stock market?
Valued at about $300 trillion, the bond market dwarfs the $124.4 trillion value of the global stock market. The United States accounts for about 40% of the global bond market and about 42% of the global equity market.
Bonds and bank loans form what is known as the credit market. The global credit market in aggregate is about three times the size of the global equity market. Bank loans are not securities under the Securities and Exchange Act, but bonds typically are and are therefore more highly regulated.
Equity markets offer higher expected returns than fixed-income markets, but they also carry higher risk. Equity market investors are typically more interested in capital appreciation and pursue more aggressive strategies than fixed-income market investors.
| Rank | Fund | Yield |
|---|---|---|
| 1 | Vanguard High-Yield Corporate Fund Investor Shares (VWEHX) | 6.40% |
| 2 | T. Rowe Price High Yield Fund (PRHYX) | 7.02% |
| 3 | PGIM High Yield Fund Class A (PBHAX) | 7.22% |
| 4 | Fidelity Capital & Income Fund (fa*gIX) | 6.16% |
US high yield continues to maintain a high-quality bias with limited CCC issuance. High risk paper has moved into other asset classes like leveraged loans and private debt. The YTW of 7.96%2 offers investors a yield that is 50-150 bps greater than the 5, 10, 15, and 20-year averages.
If you look at the BBB rated bonds (lowest rated investment grade bond), based on historical data, there is a 1.60% expected probability of default over a 5-year period, whereas the expected probability of default significantly increases to 9.27% for a B rated (Speculative) bond.
The global high yield market is now larger than USD 4.5 trillion. A decade ago, the high yield market consisted primarily of North American issuers; today it is much broader, with an increasingly international flavor coming from European and emerging markets (EM).
Here are 3 reasons why now's a good time to evaluate the role of high-quality fixed income exposure in your portfolio. Bonds are providing healthier yields than we've seen since before the 2008 global financial crisis. Higher current yields support a much-improved outlook for bond returns going forward.
Fixed-income provides stability and regular cash flow, while stock investments offer growth over time, albeit at the expense of volatility. So a good investor can design a portfolio with both elements to meet their short- and long-term needs.
Weekly fixed income update highlights
Total returns were negative for Treasuries and most spread sectors. Investment grade corporates, MBS, preferreds and emerging markets all outperformed. Municipal bond yields increased. New issue supply was $6B and fund inflows were $80M.
What are the most popular fixed income typologies?
Fixed income broadly refers to those types of investment security that pay investors fixed interest or dividend payments until their maturity date. At maturity, investors are repaid the principal amount they had invested. Government and corporate bonds are the most common types of fixed-income products.
A money market fund is a type of fixed income mutual fund with very stringent maturity, credit quality, diversification, and liquidity requirements intended to help it achieve its goals of principal preservation and daily access for investors.
| Global Rank | Stock Exchange | Country |
|---|---|---|
| 1 | NYSE | 🇺🇸 U.S. |
| 2 | Nasdaq | 🇺🇸 U.S. |
| 3 | Euronext | 🇳🇱 Netherlands |
| 4 | Shanghai Stock Exchange | 🇨🇳 China |
The impact investing Asset Under Management (AUM) was valued at USD 3.3 trillion in 2022. The market growth is driven by numerous key factors shaping the landscape of sustainable and socially responsible investments.
America is the world's largest national economy and leading global trader. The process of opening world markets and expanding trade, initiated in the United States in 1934 and consistently pursued since the end of the Second World War, has played an important role in the development of American prosperity.
