Time for Core (Plus) Bond Portfolios Again?

The fixed income landscape is shifting, presenting compelling opportunities as bond valuations become more attractive. Investors should consider extending duration, particularly as 10-year Treasury yields approach higher ranges, signaling a potentially more favorable risk-reward profile.

Central bank policy remains a key driver, with a hawkish Fed emphasizing data dependence, suggesting an environment of increased volatility. This necessitates an active and selective approach to navigate opportunities in developed markets credit and emerging market debt.

While EM debt has shown strong performance, selectivity is crucial, balancing local currency exposure with USD-denominated debt to mitigate currency risks. Euro bonds also offer attractive yields for U.S. dollar investors, providing an opportunity for global diversification.