Monthly report
Fed policy shift points to more curve steepening
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Overview
Monetary and fiscal policy interdependency is driving curve steepening, as investors in longs fret about issuance, while central banks ease rates. A policy shift to growth may drive a 50bp Fed easing this month, as labour markets weaken, leaving the USD at risk. LDI flows, and attractive yields may restrict the rise in long yields. Credit remains in a sweet spot.
Key highlights:
- Macro and policy backdrop – Both the Fed and BoE shift focus to growth?
- Yields, curves and spreads – US spreads tighten on easing hopes. Curves steepen again
- IG credit and MBS – Credit remains in a sweet spot, helped by attractive yield level
- High yield credit analysis – Share of BB issuance continues to increase, CCC falls
- Performance – Weak dollar, long end underperformance still dominate YTD returns
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 bond 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.
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