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Global Fixed Income Strategy Monthly Report | May 2025

4 June 2025
James Ong
James Ong
Director, Derivative Portfolio Management
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 discuss how US fiscal concerns have implications for US and global bond yields.

Credit

Certain segments of US securitized debt look attractive, according to IFI’s Structured Debt Team. They highlight where they see potential opportunities in MBS, RMBS, CMBS and ABS.

Interest rate outlook, US

We are neutral on US Treasuries as several factors have pushed risk premium higher, making it difficult to predict the direction of the interest rate market. We are neutral on European rates and expect the yield curve to steepen.

Currency outlook, US

We are underweight the US dollar, as we could see a decline in dollar appetite amid policy uncertainty and other headwinds. We are overweight the euro and believe there is potential for further appreciation.

The bottom line

We speak with IFI’s Emerging Market Debt Team about the recent combination of local and external debt teams to create investment synergies and improve client experience.

Interest rate outlook, EMEA

We are overweight UK rates. We see a potential downside in short-term rates and value in longer-maturity rates for long-term investors.

Currency outlook, EMEA

We are underweight the British pound as we expect interest rate differentials to narrow with Europe and Japan.

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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

    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. Views and opinions are based on current market conditions and are subject to change.

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