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Month in Review
In the US, the Federal Reserve kept interest rates unchanged at its March meeting, as expected, but the outlook has become less clear heading into April. The labor market is showing signs of cooling, with job growth moderating and unemployment edging up, which would normally support future rate cuts. However, ongoing tensions in the Middle East have contributed to higher energy prices, adding to inflation risks and complicating the timing of easing. As a result, government bond yields have remained elevated rather than declining, suggesting bonds are not providing their usual level of protection. At the same time, uncertainty around the future policy path has contributed to continued volatility in rate markets.
In Europe, the ECB also left interest rates unchanged in March. However, bond markets are increasingly influenced by government spending alongside central bank policy. Germany’s decision to increase spending on infrastructure and defense has pushed borrowing costs higher across the region. At the same time, elevated energy prices continue to pose upside risks to inflation, which may limit how quickly the ECB can lower rates. Together, these factors have made European bond markets more volatile and harder to predict.
Georgian Market
In March, there was new bond issued on the Georgian local corporate bond market - TBC Leasing (GEL 160mn, 5- year). At the same time, two existing local corporate bonds matured, including those MFO Rico Express LLC and TBC Leasing.
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