Global Fixed Income Strategy August 2025

Get an analysis of important drivers of global fixed income markets, including macroeconomic trends, interest rates, currencies, and credit, in our monthly global strategy report.

In our August report:

• Global macro strategy
  We believe global economic trends and policies provide a positive backdrop for non-US assets. Non-US exposure may enhance income, expand diversification and elevate total return potential.
• Interest rate outlook
  US: We’re neutral on interest rates; we expect longer-term yields to remain range bound, as conflicting signals from growth and inflation balance each other out.
  
  Europe: We’re neutral on European rates; we expect rates to remain close to current levels, though the European Central Bank (ECB) is prepared to lower rates if needed.
• Currency outlook
  US: We’re underweight the US dollar and expect a gradual depreciation over the medium term.
  
  Europe: We’re overweight the euro, given the expected improvement in Europe’s fiscal backdrop in 2026 and our expectation that the region’s economy will likely recover next year.
• Global credit strategy
  We believe the US municipal market offers compelling tax advantaged yields and highlight three sectors where we see opportunities.
• The bottom line
  Our investment grade leaders explain why US economic resilience and strong market technicals have supported investment grade this year and why solid corporate fundamentals could support continued positive performance.