Fixed Income Outlook 2Q 2026

Geopolitical tension in the Middle East is keeping energy prices elevated and has raised near-term inflation risks across global markets.

That backdrop supports a selective, active approach, with opportunities emerging where policy divergence and improving fundamentals can still reward disciplined investors.

The US remains relatively resilient, but slower growth ahead could strengthen the case for longer-duration exposure over time, while Europe and the UK look more exposed to stagflation pressure if energy shocks persist.

In credit, the software selloff highlights a widening gap between businesses that can adapt to AI and those that may face disruption, making security selection especially important.

Emerging market debt also stands out as a strategic opportunity, supported by better policy frameworks, attractive valuations, and a less constraining dollar environment.