Offline24h

Global fixed income markets experienced mild volatility as UST yields climbed modestly across the curve, with 10Y up to 4.13% and 2Y reaching 3.61%. Short-term funding stress subsided, helping stabilize system liquidity, while risk premiums in credit markets showed signs of further widening due to heightened risk aversion. The Fed’s recent 25bp rate cut brought the policy rate to 3.75–4%, aiming to support labor markets amid inflation above target, though uncertainty remains over the timing of further easing. Despite strong fundamentals, downside risks persist as tariffs threaten consumer spending and business investment. However, recession is not the base case, and the yield landscape offers attractive entry points for high-quality carry and select spread products. UST curve steepening reflects persistent term premium and sticky inflation expectations, keeping returns in positive territory for active duration management. Strong demand underpins the municipal market, matching expanded taxable supply; steady inflows and tax-exempt yields rival taxable rates, maintaining robust investor participation. In global markets, record-high bond issuance surpassed $5.95 trillion, though net new corporate supply is subdued as refinancing dominates. Flows into Investment Grade and Emerging Market debt remain supportive, with EM performance outpacing Treasuries by over 400bp YTD. Credit remains well bid, especially in crossover space, despite minor idiosyncratic cracks, as systemic risk stays low given healthy bank earnings. Expectations are shifting towards further central bank easing in 2026, likely supporting bond prices. Technicals in convertibles remain firm, repackaging rate and equity exposure while volatility expectations for the new year increase against a macro backdrop of geopolitical tensions and evolving fiscal policy. Overall, attractive yields, stable fundamentals, steady demand, and cautious optimism about macro policy continue to define the fixed income outlook, favoring active positioning and diversified carry strategies.