January 2026
Please see below for a series of fixed income and currency macro viewpoints from Insight’s lead portfolio managers.
| Insight Spokesperson | Quote |
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Federico Garcia Zamora,
Head of EMD Macro Strategies  |
Colombia may have the best total return outlook amongst mainstream local emerging markets Colombia executed a hard-currency bond buyback program during the second half of 2025, tightening spreads and signalling a shift toward greater local issuance in the future. This has caused the local market rates to move higher and the yield curve to bear flatten, meaning the difference between short-term and long-term interest rates has decreased. Currently, around 300bp of hikes are now priced in – a scenario we view as unlikely. We believe local duration in Colombia is attractive, on a currency-hedged basis. If yields decline, investors could benefit from both elevated income and meaningful price appreciation, positioning Colombia as our top candidate for total returns across local emerging markets, which is reflected across our portfolios. While some volatility is expected ahead of the election, a potential consolidation of opposition parties around a credible candidate could trigger a pivot toward fiscal discipline – a scenario not currently priced in and one that could provide a meaningful tailwind for Colombian markets in 2026.
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| Harvey Bradley Co-Head of Global Rates  |
Time to go tactically long duration in European rates Following recent hawkish remarks from key ECB officials, euro-area government bonds have repriced to reflect expectations of higher interest rates in 2026 – a view we believe is misplaced. With yields in core markets approaching the upper end of their recent ranges, we’ve taken this as an opportunity to move tactically long duration, adding long-maturity bonds to position for price gains as yields decline in future. While we remain broadly constructive on the eurozone’s outlook, we see growth running at best near trend in 2026, and likely slightly below. With inflation risks subdued, we see no credible case for the ECB to start its hiking cycle anytime soon. |
| Bonnie Abdul-Aziz, Head of European Credit  |
Buckle up for the reverse yankee boost
Early 2026 should see a meaningful increase in new issuance in euro-denominated investment grade credit as corporates look to lock in their funding for the year. We’re already seeing an uptick in debt being issued for capital expenditure and M&A activity. One trend that we’re actively monitoring is where high-quality US corporates issue euro-denominated debt – commonly known as ‘reverse yankee’ issuance. US corporates find the lower euro coupons attractive and tend to issue longer maturity debt. creating excellent opportunities for European credit investors seeking to diversify portfolios. We don’t see any reason for demand to falter this year – the European Central Bank should be on hold all year, and investment grade credit offers a meaningful pickup from cash, so we expect demand to remain high in a year likely to be characterised by security selection and relative value trades. |
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James DiChiaro
Senior Portfolio Manager  |
Fixed income is financing AI, and there are many ways to play it
The surge in issuance related to AI technology continues to offer compelling yield opportunities up and down the credit spectrum. Insight is positioned to take advantage of the rapidly expanding universe of offerings within this domestic sector that offers enticing risk-adjusted returns. Security selection opportunities remain abundant for those able to dive into contract analysis, as new sources of predictable cashflows support data centers, fiber networks, and cell towers - all of which are expected to tap the fixed-income markets in 2026. Regulated, integrated utilities are also building out natural gas capacities, an important power source for AI, and a sound source of cashflow; not to mention potentially sizeable spreads on hybrid debt. Furthermore, regulated utilities may express defensive attributes if AI proves to be something of a bubble, versus the potentially riskier end of the spectrum, such as private development finance deals for data centers, or high yield land lease-backed transactions.
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| Rodica Glavan Head of EM Corporate Fixed Income  |
2026 could be another great year for emerging market corporate debt
In our view, emerging-market (EM) corporates continue to stand out as one of the most compelling opportunities in global credit. Despite strong outperformance versus developed-market (DM) peers in 2025, we remain supportive. EM enjoys a healthy growth differential over DM, stable global trade, a weaker U.S. dollar, and sustained inflows.
Corporate fundamentals reinforce this view – leverage, earnings, and interest coverage all look stronger than in DM, a factor that has kept default rates below long-term average levels. The technical backdrop is equally favourable: 2025 marked the fourth consecutive year of negative net supply, and 2026 is expected to be the fifth. Against this backdrop, we maintain an overweight in EM corporates overall, with a particular preference for EM high yield over investment grade. |
| Federico Garcia Zamora Head of EMD Macro Strategies |
Venezuelan bonds may rally further as US oil interests get underway
We have held an overweight to Venezuelan debt for several years, over which time the profile of the investment thesis has evolved. Initially, the main attraction was to have exposure to the very large oil reserves in Venezuela. Then in 2024 the addition of Venezuelan debt to market indices drove further demand from investors. The prospect of regime change had also begun to drive a fundamental reassessment of Venezuela by markets, leading to a surge in prices.
What we’re seeing now is a further shift in gears, creating space in the short term for prices to move still higher, buoyed by the apparent readiness of the US to apply its military and financial resources in putting Venezuela's oil reserves to work. The Venezuelan oil sector remains under strict US sanctions however details of conditions for US companies seeking to enter the market are expected, and early indications suggest existing participants may seek to expand operations. In our portfolios we have taken some profits on Venezuelan positions but are maintaining an overweight position as we expect current trends to continue for now.
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| Erin Spalsbury Head of US Investment Grade Credit  |
Higher issuance in 2026 should push spreads wider – tapping new issuance will be key.
Recent corporate earnings have reaffirmed our view of strong fundamentals, underpinned by robust profit growth. However, a notable theme across results has been rising capital expenditure. We’re positioning for a significant increase in issuance in 2026, defined by borrowing for capex and M&A. While this supply dynamic has been well telegraphed, and is unlikely to surprise markets, we anticipate that spreads will edge wider and settle into a higher trading range early in the year as corporates return to the market in size. Managers that can play an active role in primary markets should have an advantage as new issues typically come to market at a higher than market yield. For those that can capture this, it should help to cushion the impact of broader spread widening. By contrast, passive investors will bear the full impact, as they can only add this new issuance once it enters benchmark indices – typically well after the initial offering and at a spread in line with the market. |
| Harry Jones Portfolio Manager  |
Relative value opportunities remain plentiful in 2026
Today, we’re seeing a marked divergence in monetary and fiscal policy. As these differences play out, bond markets can shift relative to one another, and away from where fundamentals suggest they should trade – creating compelling opportunities for active managers.
In Europe, Norwegian government bonds stand out as attractive versus Germany, with Norway exemplifying fiscal discipline and likely to ease rates, while Germany embarks on significant fiscal expansion. Conversely, countries on less sustainable fiscal paths – such as France and Belgium – appear good markets to avoid relative to those showing improvement, such as Spain. |
| Isobel Lee Co-Head of Global Rates  |
More hikes ahead in Japan, but the yield curve is too steep – time to buy long-maturity bonds
The Bank of Japan has raised rates to 0.75% – the highest level in three decades – marking a definitive exit from the era of deflation. We expect the BoJ to continue tightening in 2026, with three additional hikes likely. While this aligns broadly with market expectations, we see a risk that the pace could be faster than consensus anticipates. The neutral rate now appears to be in the 1.5%–2% range and this is now priced in.
In our view, markets have become overly aggressive in pricing inflation, and with the terminal level of rates largely priced in, the yield curve looks excessively steep – particularly between 10 and 30 years. Food price inflation is easing and the government is shortening its issuance profile, which should help anchor the curve in the months ahead. This underpins our bullish stance on longer-maturity bonds on the yield curve, and we’ve positioned our portfolios to take advantage of this opportunity. |
| Gareth Colesmith Head of Global Macro Research  |
Escalating competition for rare earth elements and advanced semiconductors
Ongoing strategic competition between the United States and China over control of rare earth elements and advanced semiconductors has profound implications for technological innovation, supply chain resilience, and global security. As such, it is a critical geopolitical dynamic to monitor within global portfolios. China currently dominates the mining and refining of rare earths, essential in aerospace and defence, while the US and allies retain leadership in the most advanced semiconductor chips. Both sides have applied export controls and trade restrictions as leverage, resulting in periodic escalations and tactical de-escalations that unsettle global markets.
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