After a modest surge in inflation and economic growth, both slowly slide to subdued levels by the end of 2026. But as has been the case in 2025, there is plenty of potential for a considerably bumpier ride.

Fixed income investing is less about a big bet on the direction of interest rates and more about managing for a range of outcomes. This means active fixed income management, disciplined risk control and careful positioning are more important than ever.

While markets appear undeterred, even with solid fundamentals markets can correct, investors should be prepared for both success and setbacks.

After a strong start to 2025 in 1Q and then a 6-month pause in 2025, global reallocation should be a recurring tailwind in 2026 and beyond. Inflows into emerging markets have begun to inflect higher after muted interest the last few years.

Global macro practitioners today have catalysts everywhere they look: Divergent central bank policies, reshoring of supply chains and geopolitical risks are creating tradeable dislocations across rates, currencies and commodities.

For those worried that in today’s world diversification is dead, take comfort: reports of its death are greatly exaggerated, and now marks an excellent time to get back “onsides.”