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Global Fixed Income Strategy Monthly Report

12 August 2025
Invesco
The landmark of Toronto CN Tower rising straight up alongside compact corporate skyscrapers in sunrise.

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

We believe global economic trends and policies provide a positive backdrop for non-US assets.

Credit

We believe the US municipal market offers compelling tax advantaged yields. We highlight three sectors where we see opportunities.

Interest rate outlook

We are neutral on European rates; we expect rates to remain close to current levels, though the ECB is prepared to lower rates if needed. We are overweight UK rates amid attractive longer-term yields.

Currency outlook

We are overweight on 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. The British pound is underweight amid several headwinds, including potential policy rate cuts and fiscal pressures.

The bottom line

US economic resilience and strong market technicals have supported investment grade this year. Solid corporate fundamentals could support continued positive performance. 

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  • Investment risks

    The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. 

    Important information

    Views and opinions are based on current market conditions and are subject to change. This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. 

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