February 2026
Read the latest 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  |
Time to take profits in Brazil, but Colombia still stands out in a broadly positive environment for emerging markets We’re taking profits in Brazil after a strong run but remain broadly positive on local emerging markets. With elections approaching, and Brazilian President Luiz Inacio Lula da Silva likely to secure another term, we expect persistent fiscal expansion to cap any further compression in Brazilian bond risk premia. In contrast, we remain constructive on Colombia, where valuations are more attractive and the election cycle could deliver a more market‑friendly administration. After a period of aggressive fiscal expansion, some consolidation would be welcome and supportive for bonds, and we believe markets are currently underestimating the potential for this to happen. We’re overweight Colombian bonds in anticipation of a future market repricing.
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| Rodica Glavan, Head of EM Corporate Fixed Income  |
We’re adding EM corporates as conditions for strong demand align
The technical backdrop for emerging market (EM) corporates is highly supportive: net issuance is set to remain negative for a fifth consecutive year, just as inflows return to the asset class. Historically, EM has seen strong demand when three conditions align – a wide growth differential between EM and developed markets, solid returns and constructive global risk sentiment. All three are now firmly in place and we are positioning to take advantage. Added to this is a K‑shaped commodity backdrop, where rising metals prices and muted oil markets are creating a favourable environment for both EM corporate balance sheets and sovereign fundamentals. In our view, EM high yield corporates remain particularly appealing relative to global high yield markets, exhibiting lower leverage and stronger short‑term liquidity. We’ve been adding EM corporate risk across those accounts with the flexibility to do so and expect the asset class to continue to draw in global crossover investors.
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| Harry Jones, Portfolio Manager  |
Short end of euro curve shows signs of jittery market mispricing
We believe the market’s eagerness to price in European Central Bank hikes this year is misplaced, creating opportunities. We think it’s more likely that the ECB will hold rates at 2% through 2026, with the first hike likely to come well into 2027. Although it’s not our core scenario, the ECB also has scope to cut further if needed. Our forecasts show inflation drifting below target and continuing to fall over the year. A negative external shock such as a sharper‑than‑expected slowdown in the US, could result in a more decisive drop, say to below 1.5%, and this would likely be enough to shift the Governing Council’s mindset back into dovish mode. We think the scale of the German fiscal stimulus should raise the bar to cut rates though, leaving the bank on hold. We’ll continue to closely monitor the short-end of euro yield curves to take advantage of these opportunities as they arise.
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| Harvey Bradley, Co-Head of Global Rates  |
Fiscal shift highlights appeal of targeted yield curve plays in Japan With Prime Minister Sanae Takaichi moving from a relatively fiscally conservative stance to one favouring carefully targeted stimulus, the balance of risks has tilted toward additional tightening from the Bank of Japan. We now expect two further hikes in 2026 and another in 2027. After an extended period of above‑target inflation, the argument that Japan remains stuck in a deflationary regime no longer holds. A neutral rate around 1.5% looks reasonable, and we expect 10‑year yields to remain above 2%, which is close to fair value. Takaichi’s planned election is aimed at consolidating her position, but a realignment among opposition parties may complicate that ambition and should reassure markets that the fiscal outlook is not going to meaningfully deteriorate. Tighter monetary policy, a steep yield curve and a shift in supply to shorter maturities keeps us constructive in Japanese government bonds in targeted areas of the yield curve and we’re implementing this trade across global portfolios. |
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Brendan Murphy,
Head of Fixed Income, North America  |
The intermediate area of the curve looks attractive given Fed outlook
The labour market appears to hold the key to the path of rates, and it was therefore significant that the FOMC explicitly noted ‘some signs of stabilization’ in the labour market, signalling it currently does not expect to cut rates for the next few months – perhaps not until after Jerome Powell’s time as Fed chair has come to an end. Powell continued to characterize inflation as ‘somewhat elevated’ due to tariffs, and we expect their pass‑through impact will likely peak over the next few months; he also noted a ‘clearly improved’ outlook for economic activity, indicating that any further upside surprises to growth could delay rate action further. Nonetheless, given the delayed data picture following the government shutdown and ongoing political risks, we expect the Fed would be responsive to any additional signs of labour‑market deterioration, given the risk of a vicious cycle of job losses. Either way, we believe intermediate fixed income and credit exposure looks attractive in the current environment, with the 5‑year part of the Treasury curve potentially worth consideration for rates investors.
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James DiChiaro,
Senior Portfolio Manager  |
We expect winners and losers to emerge as AI infrastructure spending reshapes bond indices
AI‑driven capital spending is accelerating at an extraordinary pace, and we expect the technology sector to become the single largest source of issuance in the US investment‑grade market – ultimately overtaking financials. The scale of funding required to build out AI infrastructure is unprecedented: data‑centre construction, grid expansion, power generation, fibre networks, towers, cooling systems, and new semiconductor capacity are all triggering a multi‑year financing cycle. Crucially, this wave of borrowing is structurally different from past tech‑related issuance. Today's investment is tied to essential, revenue‑generating, often contracted or regulated infrastructure, not speculative moonshots. That shift gives investors access to more stable cashflows, clearer visibility, and attractive risk‑adjusted returns. As this cycle deepens, AI‑linked supply will broaden and mature, reshaping the bond indices and redefining the role of technology within the wider credit universe. We think this is a huge opportunity to sift the winners from the losers, and we’re taking full advantage of this for our clients.
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