Global Fixed Income Strategy Monthly Report
In our regularly updated macroeconomic analysis, we offer an outlook for interest rates and currencies – and look at which fixed income assets are favoured across a range of market environments.
In this edition:
Macro
Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium suggested he is open to a rate cut in September. We believe a softening US labor market justifies a recalibration of monetary policy.
Credit
With the average effective US tariff rate now nearly eight times higher than at the start of 2025, we explore how companies are responding with increased strategic precision, adjustments to cost structures and operational plans.
Interest rate outlook
We are neutral on European rates. We expect the European Central Bank (ECB) to be on hold at its September meeting, after pausing in July. In contrast, we are overweight on UK rates.
Currency outlook
We are overweight the euro, given expected fiscal improvement in 2026 and anticipated recovery in the region’s economy. We are underweight the British pound, which could see volatility ahead of the November Budget.
The bottom line
We speak with Mark Paris, CIO and Head of the Invesco Municipal Bond Team, about this summer’s supply dynamic and other factors driving municipal markets.
