Corporate Bonds

With central banks largely on hold, the return of a lower volatility environment is bringing carry trades back into focus. We outline the most attractive carry opportunities across global fixed income markets.

We recommend increasing exposure to spread product as the US economy transitions back into a low rate vol regime.

Volatility is high, but the path for yields is clearer than it looks. Across three oil scenarios, we show how policy responses shape fixed income markets and why the balance of risks still points to lower yields.

Our Portfolio Allocation Summary for April 2026.

The current macro environment is a toxic brew of many of the same vulnerabilities that haunted the global economy in the lead-up to past recessions: Rising oil prices, an unsustainable tech capex boom, elevated equity valuations, excessively high homes prices, and brewing stresses in private credit and other parts of the financial system. While global equities look increasingly oversold in the very near term, they will still finish the year below current levels.

Our Portfolio Allocation Summary for March 2026.

The turmoil in private credit is a wild card, but our traditional suite of credit cycle indicators does not point to an imminent spread-widening episode. We reiterate our benchmark weightings on Treasuries, investment-grade and high-yield corporate bonds.

Interest rate volatility is very low across developed market fixed income. Investors should maximize the carry in their portfolios to outperform in a low rate vol environment.

Our Portfolio Allocation Summary for February 2026.

The 10-year Treasury term premium is now competitive with Baa- and Ba-rated credit spreads. Even without term premium compression, duration carry trades could outperform credit carry trades in a low rate vol environment.