Amid diverging global policy paths and persistent macro uncertainty, fixed income is entering a new phase defined by historically elevated yields, resilient fundamentals, and widening dispersion. Opportunities are growing across sectors and regions, supported by strong technicals and a shift toward more accommodative policy. In this environment, fixed income stands out as a source of both income and stability, with active management key to unlocking relative value.
The fourth quarter opens with global fixed income markets at an important inflection point. After two years of aggressive tightening, central banks are pivoting toward easing, but not in unison. The Federal Reserve resumed cutting rates amid a weakening U.S. labor market, while other developed markets are taking a more cautious path. This policy divergence is reshaping global yield curves, capital flows, and cross-asset dynamics, creating both risk and opportunity.
Valuations across credit sectors remain tight, yet fundamentals continue to offer support. Investment grade corporates benefit from resilient balance sheets, strong technicals, and a favorable supply-demand backdrop. In high yield, refinancing-driven issuance has improved credit quality and extended maturities, even as tighter spreads demand selective positioning. Structured credit markets are well-supported by investor demand, though fundamentals vary by sector and borrower profile.
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