Featuring iBoxx USD Asia-Pacific
April 2025 Commentary
Following the unveiling of President Donald Trump’s “reciprocal tariffs” on more than 180 countries at the start of April, China and the EU, among others, responded with retaliatory tariffs, leading to increased market volatility and a global sell-off. The S&P 500® whipsawed in April, diving below 5,000 points before rebounding back above 5,500, bringing its monthly and YTD return to -0.76% and -5.31%, respectively. Despite signs of the U.S. economy contracting and cooling inflation in March, the U.S. Federal Reserve kept rates unchanged, concerned with a potential sharp rise in inflation due to the tariffs. In the Asia-Pacific region, central banks in India, the Philippines, Thailand and New Zealand sought to prepare their economies for the impact of U.S. tariffs by cutting rates by 25 bps.
Most Asian currencies appreciated against the U.S. dollar in April, except for the Indonesian rupiah. After gaining 4.60% in the first quarter, the Japanese yen continued to gain 4.32% in April, driven by demand for safe-haven assets.
10-Year U.S. Treasury yields—as represented by the iBoxx USD Treasuries Current 10-Year—dipped to 4.20% (down 6 bps in April, down 42 bps YTD). The index was up 0.77% and 4.52% for the month and year, respectively.
Chinese equities—as represented by the S&P China 500 (USD)—had their worst month of the year in April (down 4.24%), dragging their YTD gain to 2.16%. Meanwhile, Chinese-issued U.S. dollar bonds—as represented by the iBoxx USD Asia ex-Japan China—gained 0.25% in April and 2.75% YTD.
The Asian U.S. dollar bond market concluded the month up 0.14%, with a 0.29% gain from investment grade bonds and 0.88% loss from high yield bonds. In terms of the one-year return, high yield bonds continued to lead in performance (up 9.24%) among the three broad categories, followed by the overall market (up 7.68%) and the investment grade segment (up 7.43%).
China Real Estate clocked its third consecutive month of gains, posting 0.32% in April. It also stood out as one of the best-performing segments in the past one-year period, up 21.98%. The APAC ex-China U.S. dollar bond market outperformed the Asian ex-Japan U.S. dollar bond market by 2 bps in April but lagged by 20 bps for the past one-year period.
Short to medium maturity investment grade bonds delivered positive performances in April, while long-dated investment grade bonds with maturities of 10 years or more declined for a second straight month, mirroring the trend of U.S. Treasuries. All high yield maturity segments reported losses in April, except for most ultrashort 0-1 year segments.
