July 2025
Please see below for a series of fixed income and currency macro viewpoints from Insight’s lead portfolio managers.
| Insight Spokesperson | Quote |
|
Francesca Fornasari
Head of Currency  |
Topic: Protectionism’s price "The pause in reciprocal tariffs has provided some relief, and may well be extended further, but we are witnessing a fundamental redrawing of the rules of global trade. Trade deals will be signed, with the UK first to strike a deal, but these will all be on worse terms than has prevailed over recent decades. Some significantly so. We believe this is going to weigh on US growth and ultimately the US dollar." |
| Harvey Bradley Co-Head of Global Rates Investment  |
Topic: An Atlantic divide in bond return "We believe European bond markets are likely to underperform their US counterparts over the next 12 months in total return terms. The ECB has been able to front load its easing cycle and is now well ahead of the Fed, so as the Fed catches up in 2026, we believe it will be positive for US bonds out to around the 10-year area. The higher running yield in US bond markets, combined with the rally in yields, would lead to a significant relative outperformance for investors holding US bonds." |
| Peter Bentley Global Head of Fixed Income  |
Topic: Tariffs loom, markets look away "While the most severe tariffs have been put off in the short term, the structural shift toward US protectionism, anchored by a baseline 10% tariff, poses a growing risk to global supply chains, inflation, and growth. We expect these headwinds to intensify from the summer onwards, with growth stagnating into early 2026. Equity markets have recovered strongly after their initial sell off and we think this has created a level of complacency in markets about the outlook." |
| Brendan Murphy Head of Fixed Income, North America  |
Topic: Tariffs tangle the Fed’s path "Typically, we would expect the Federal Reserve to respond to a weakening outlook with a more dovish stance, accelerating the pace of rate cuts to support growth. However, the inflationary impulse from recent tariffs will complicate the Fed’s reaction function. Against this backdrop, we expect the Fed to proceed cautiously. Rates are likely to be edged lower into year-end as evidence mounts that tariff-driven inflation has peaked. We then anticipate a more decisive series of rate cuts in 2026, once inflationary pressures subside, and growth concerns take precedence." |
| April LaRusse Head of Investment Specialists  |
Topic: The hunt for yield heats up "Corporate earnings remain resilient, inflation data is stabilising, and capital continues to flow into the credit market. Notably, May saw a record-breaking volume of euro-denominated issuance—matching levels last seen in April and May of 2020. The market has reversed last month’s widening in spreads, and supply is now expected to slow into the summer. This environment is likely to intensify the hunt for yield, especially as absolute yields have risen over the past month. As a result, spreads appear poised to grind lower, with new issue premiums likely to compress as investors battle for allocations." |
| Nate Hyde Senior Portfolio Manager  |
Topic: Bond markets "We think you need to prepare for more volatility rather than less, but that’s not necessarily a bad thing. With US trade policy appearing to be conducted on an ad-hoc basis, we expect increasingly differentiated global economic performance. This in turn should result in higher cross-market dispersion of fixed income returns as the COVID-era synchronization of monetary policy draws to an end. Along these same lines, we expect activist US industrial policy, combined with sector-level retaliatory tariffs, to result in similarly differentiated performance across corporate credit. Thinking globally in fixed income may be the way to capitalize." |
| Adam Whiteley Head of Global Credit  |
Topic: Tariffs demand precision in credit "The uncertainty and noise around the new tariff regime is obviously high, so we are focused on relative value and security selection as opposed to large directional views in credit. The impact of tariffs will vary considerably between firms. For example, many telecoms companies have large franchises within a single country, or a small cluster of countries, and people will cut many things before they cut their mobile phone. These companies will tend to have relatively stable cashflows regardless of what happens with tariffs." |
| Scott Zaleski Head of US Multi Sector Fixed Income  |
Topic: US fixed income outlook
"Amid all the day-to-day noise, it can be easy to forget that fixed income again offers the three things investors tend to want from the asset class: yield, income and ballast. Over the last 50 years, the US Aggregate bond market has only delivered negative returns twice when yields started the year above 4% and those two specific events were during rate hiking cycles, which is not our forward expectation. We currently see value in being overweight investment grade and high yield corporate bonds, with a skew toward higher quality credits and those sectors that are less tariff sensitive. Additional allocations to areas like less mainstream or “esoteric” asset-backed securities as well as emerging market companies that may benefit from the US and China’s competition for trading partners and control of supply chains."
|
| Erin Spalsbury Head of US Investment Grade  |
Topic: Broadening the bond playbook "US credit has proven more stable recently, with corporate bonds supported by yield buying, lower net issuance, stable leverage and reasonably strong earnings. But with the economy softening and spreads historically tight, investors may also be seeking to diversify to smooth the ongoing backdrop of volatility and uncertainty. We are seeing many considering expanding their exposure to encompass global bonds, which may make sense in a world of geopolitical uncertainty." |
|
James DiChiaro
Senior Portfolio Manager  |
Topic: US high yield’s quiet strength "Many investors have been surprised to learn that US high yield has outperformed Treasuries, investment grade bonds, and US equities despite the increase in volatility this year. This isn’t the high yield market of 10 to 20 years ago. Credit quality has improved over time, private credit and leveraged loans have diverted some of the highly leveraged issuers away from traditional high yield bonds, and interest rate risk is less of a concern for investors given the shorter duration of the asset class. With yields on high yield close to 7.5%, ignoring defaults, yields would have to rise nearly 250 basis points to take 12-month total returns to zero. This may be a more robust asset class than many think, especially when implementing a skew toward US domestic higher quality and less tariff-sensitive credits." |
| Damien Hill Senior Portfolio Manager  |
Topic: Sterling credit’s relative edge "We currently see a strong tactical relative-value opportunity for sterling investment grade credit. One of the most powerful factors in its favour is a smaller exposure to the global trade war than US or eurozone credit markets due to a lower proportion of issuers in cyclical industries." |