Monthly report
Curves steepen but 4-5% government yields attractive?
Overview
G7 government bonds were stable in July but longer Treasuries and gilts are near 15-year yield highs, attracting LDI flows. Gold retains its 2025 gains, despite lower uncertainty, due to a broader portfolio role. Stagflation complicates Fed and BoE policy, but weaker growth may force easing. European rate cuts and the weak USD dominate performance returns.
Key highlights:
- Macro and policy backdrop – Stagflation complexity for Fed versus policy freedom for ECB
- Yields, curves and spreads – Steepening trend intact. US sovereign spreads stabilise
- IG credit and MBS – Yield per unit of duration risk still attractive in IG
- High yield credit analysis – Risk rally and improved credit quality offer support
- SI bond analysis – OAS spreads tightened for green bond indices, to a 5-year low
- Performance – Shorter dated Bunds, gilts and climate-WGBI lead YTD returns in USD
From October 2025, we will be combining the US Fixed Income Insights and Canada Fixed Income Insights reports into a consolidated North America Fixed Income Insights edition. The new monthly North America edition will analyse the Global and North American macro backdrop and cover the latest developments in the US and Canadian sovereign bonds and credit markets.
These reports provide actionable insights on global fixed income markets. They cover shifts in global yield curve and credit spreads, across sovereign, inflation-linked and corporate indices, and FX-adjusted return performance using proprietary month-end data from our global fixed income indices.
For specialist content on a range of investment topics, including macroeconomic analysis and how it affects market performance and multi-asset analysis, viewed through our indices and data, explore our Global Investment Research hub.
