Fixed Income Perspectives

Looking ahead to 1Q 2025: Finding opportunities in a dynamic global environment

As the Federal Reserve continues its gradual rate-cutting cycle, the U.S. economy demonstrates resilience in the face of evolving policy shifts and geopolitical uncertainties. Fixed income markets are navigating diverging central bank approaches, presenting both opportunities and challenges for investors. With elevated yields, robust credit fundamentals, and selective opportunities across asset classes, fixed income offers an attractive landscape heading into the new year.

Evolving Monetary Policies Shape Markets

Central banks worldwide are easing cautiously, with the Federal Reserve maintaining a measured pace of rate cuts while other central banks weigh policy adjustments amid uneven global growth and trade uncertainties.

Resilient Fundamentals Support Fixed Income

From investment grade to high yield, municipals, and private credit, solid credit metrics and favorable demand dynamics are helping offset tighter spreads and volatility, creating a foundation for attractive total returns.

Selective Opportunities Across Asset Classes

Elevated yields across emerging market debt, securitized credit, and municipals highlight the importance of active management as investors capitalize on yield premiums, diversification benefits, and sector-specific strengths.