Quarterly report
Advanced easing cycles but value in some longs?
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Overview
Credit markets enjoyed a strong 2025, buoyed by policy easing, easier financial conditions and no recession in the US and Canada, despite tariff risks. The challenge for North American fixed income in 2026 is making late-cycle gains when easing is more advanced, and credit spreads are at multi-year lows, even if the end of central bank QT is supportive. The tail risk of a recession remains, and supports a flexible approach to fixed income weights, and duration, with steeper curves offering more value in longs, led by US and UK.
Key highlights:
- Macro and policy backdrop – After unwinding 2022-23 tightening in 2025, a tougher year?
- Spotlight on central banks – Balancing financial stability and monetary policy needs
- FX – More dollar weakness in 2026? Is the yen carry trade about to unravel?
- US Treasuries and credit – A steeper US yield curve starts to attract investors
- Canadian governments, provinces and municipals – Spreads versus governments tighten further
- Canadian IG and HY credit – Steeper curve and strong T1 ratios help financials
- Performance – Q4 rallies in gilts and Treasuries, Canadian credit outperforms in 2025
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.
