Summary

• The Bloomberg 1-3 Year Government/Credit Index returned 0.28% in Q1, marking its lowest quarterly return since Q4 2024.
• Diamond Hill notes the US and Israel launched combat operations against Iran on February 28, causing Brent crude oil to experience its biggest quarterly increase since 1990.
• The Federal Reserve held rates steady at the March 18 meeting and avoided providing any kind of hints about the future path of interest rates.
• The Trump administration ordered government-sponsored entities to begin purchasing $200 billion in mortgages, pushing spread levels tighter in early January and February.
• Auto loans and consumer unsecured asset-backed securities continued to deliver strong performance as the noise from the Tricolor bankruptcy continues to fade.

Market review and outlook

The Bloomberg 1-3 Year Government/Credit Index returned 0.28% in Q1, its lowest quarterly return since Q4 2024 (-0.02%). Through the first two months of the year, the index returned 0.75% as economic data remained broadly

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