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UST 10Y yield held steady at 4.25%, influenced by Fed meeting forward guidance, with markets pricing 85% odds for a 25bp cut in December, though 2026 total easing expectations trimmed to 75bp amid inflation resilience and fiscal deficit concerns. The 2Y/10Y curve steepened mildly by 5bp, highlighting short-end policy uncertainty, as investors shifted toward extending duration to capture potential bull steepener dynamics. IG corporate spreads stayed at 95bp, while HY widened to 375bp, with credit rotation favoring high-quality issuers to sidestep liquidity risks.​

MBS spreads tightened 2bp to +105bp, supported by balanced supply-demand and stable housing data, with convexity hedging bolstering relative value trades. CLO AAA spreads compressed to +140bp, secondary tranches rose 15bp, signaling robust leveraged loan fundamentals yet rising regulatory headwinds. EM hard currency debt yields fell to 6.8%, buoyed by USD weakness boosting sentiment, spreads narrowing 10bp to +250bp, favoring Brazil and Mexico sovereign arbitrage plays.​

Post-Fed meeting, the yield curve anticipates continued bear steepening, testing 10Y upper bound at 4.40%; soft landing data would favor duration extension to intermediate sector. Credit volatility intensifies amid fiscal policy spillovers, recommending IRS overlays to capture spread widening tail risks. Overall fixed income backdrop remains constructive, with annualized total return potential of 4-6%, prioritizing sovereigns and prime ABS allocations.