Key Convictions: First quarter 2026

Global fixed-income markets in 2026 are being supported by steady growth, moderating inflation and the tailwind of central bank easing, which together have lowered recession risks and bolstered risk assets. With inflation near target and major central banks nearing the end of their rate-cut cycles, yields are likely to stay range-bound as curves steepen modestly. In this environment, high-quality spread sectors remain a core tool for generating consistent income, backed by solid corporate and household fundamentals despite tight spreads.

Select opportunities are emerging in AI-related issuance as companies tap public markets for rapid funding, alongside elevated M&A activity that is creating new credit supply. Additional value can be found in carefully chosen CLO tranches, improving commercial mortgage-backed securities and attractive EM local rates where real yields and policy coordination support total return potential.