FICC | Bonds

Despite concerns about fiscal sustainability, a rise in term premia, and attacks on central bank independence, monetary policy remains the primary driver of bond markets. In our Q3 Review & Outlook, we update our views and identify opportunities in government bonds, short-term interest rate futures, global yield curves, inflation-linked bonds, and credit.

Our Portfolio Allocation Summary for October 2025.

Monetary policy divergences are re-emerging. We rely on BCA’s Central Bank Monitor to assess the current policy stance of major central banks, and highlight the tactical opportunities across bond markets and currencies.

Special Report

This week’s US Bond Strategy Special Report takes a look at the two most provocative papers presented at last month’s Jackson Hole conference.

Special Report

The US Treasury safe haven status is being seriously questioned. We assess whether US Treasuries are still unrivaled or which bond markets and assets are gaining ground. We do so by breaking down which global bond markets are best positioned to absorb risk-off flows in a shifting macro regime.

Median Fed unemployment rate projections are overly optimistic. The Fed will end up cutting more in 2026 than it currently anticipates.

Special Report

Structural tailwinds help explain tight credit spreads. In Europe, we see room for further tightening. Stay underweight US credit amid cyclical risks, but upgrade Euro Area IG to overweight and HY to neutral.

The ECB stood pat today, yet the policy path remains fraught with uncertainty as domestic resilience collides with global headwinds. This dichotomy continues to hold important implications for European assets over the coming months.

High US inflation is being driven by tariffs, not domestic inflationary pressure. This argues for Fed easing and a bull-steepening of the Treasury curve.

USD-denominated Emerging Market bonds have been outperforming US corporates for the past year. We don’t think the rally is exhausted yet.