FICC

Special Report

This week’s US Bond Strategy Special Report takes a look at the two most provocative papers presented at last month’s Jackson Hole conference.

Special Report

The US Treasury safe haven status is being seriously questioned. We assess whether US Treasuries are still unrivaled or which bond markets and assets are gaining ground. We do so by breaking down which global bond markets are best positioned to absorb risk-off flows in a shifting macro regime.

Median Fed unemployment rate projections are overly optimistic. The Fed will end up cutting more in 2026 than it currently anticipates.

Special Report

Structural tailwinds help explain tight credit spreads. In Europe, we see room for further tightening. Stay underweight US credit amid cyclical risks, but upgrade Euro Area IG to overweight and HY to neutral.

The ECB stood pat today, yet the policy path remains fraught with uncertainty as domestic resilience collides with global headwinds. This dichotomy continues to hold important implications for European assets over the coming months.

High US inflation is being driven by tariffs, not domestic inflationary pressure. This argues for Fed easing and a bull-steepening of the Treasury curve.

USD-denominated Emerging Market bonds have been outperforming US corporates for the past year. We don’t think the rally is exhausted yet.

The European Central Bank has achieved a soft landing. Inflation is back to target, with well-anchored inflation expectations. The unemployment rate is historically low, and real economic growth is stable, albeit weak. Given that little to no additional easing will come from the ECB, investors should underweight government bonds relative to equities.

The August employment report showed a modest increase in labor market slack, enough to cement a 25-basis-point rate cut this month.

Our Portfolio Allocation Summary for September 2025.