For all the shifts in macroeconomic risk factors that swayed market sentiment last year, most credit markets delivered on expectations for carry-driven returns in 2025. Emerging market (EM) debt was an exception, recording strong excess returns in addition to carry driven by supportive market technicals along with fundamentals that have withstood macroeconomic risks.
Despite a year of numerous challenges, the global economy has been resilient and valuations across major asset classes remain elevated. Against this backdrop, some economic signals are now indicating potential softness, which could challenge these stretched valuations.
Fixed Income Perspectives outlines the current macro and market views from across Capital Group’s extensive fixed income team and offers insights on investors’ bond exposure against an ever-changing backdrop.