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:
We share our 2026 macro outlook for the US and Europe. We’ve revised up our US growth outlook but expect sticky inflation. Europe should see better growth momentum but UK growth may soften.
We share our 2026 global credit outlook for investment grade, high yield, emerging markets and Asian credit.
We are neutral on European rates. We expect the European Central Bank to stay on hold in the near term, but believe risks are skewed toward lower versus higher rates. We are overweight UK rates. We believe softening inflation and labour dynamics will impact rates.
We are overweight the euro based on expected US dollar weakness and an improved European growth outlook. We are underweight the British pound, as Bank of England rate cuts have reduced its yield advantage.
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EMEA ETF flows remained strong in February as investors favoured smart beta strategies such as equal weight, and Emerging Market exposures. Following the onset of the Iran conflict, we’ve seen a continuation of recent themes. Investors have yet to shift their approach despite the conflict in Iran.
As economies show resilience, selectivity and care remain critical for bond investors figuring out where to take duration risk and how to think about returns.
Discover alternative cash management solutions that may be able to offer enhanced returns versus overnight deposit rates.
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