As we look forward to 2026, we remain quite optimistic on the outlook for the bond market.

We expect to see growth slowing across most of the developed market and the emerging-market world. Central banks will have a tricky situation on their hand as they think about balancing what will be a slowing growth environment and an increasing unemployment rate with an inflation mandate that is above their target in most areas.

This is going to create some consternation across these central banks, and I think is going to lead to some concern in the market that central banks may not be able to reduce interest rates. Despite that, we think central banks will have to respond to the growth outlook or the employment outlook side of their mandate.

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