Fixed Income Insights

We see Sub-Trend Growth as becoming more likely at 60%, and have lowered the probability of Above-Trend Growth to 10%. We raised the probability of a Recession to 20% while Crisis remains at 10%.

The situation around the consumer continues to be complex, with K-shaped outcomes persisting, necessitating rigorous and disciplined security selection in consumer credit investments.

Interest rates are likely to settle at a higher level than in recent years, providing bonds with more ability to offer income, diversification and stability in balanced portfolios.

The spread between the 3-month U.S. Treasury bill yield and the 10-year U.S. Treasury yield, commonly referred to as the yield curve spread, is a vital indicator in financial markets and is closely monitored by investors and the Federal Reserve, particularly given the historical efficacy of its inversion predicting U.S. recessions.

Every December, we publish our predictions for the year ahead. We believe these predictions have at least a 1-in-3 probability of materializing – making them realistic, while not necessarily being our base case expectations. We also ensure our predictions are not currently priced into the markets – making them surprises relative to investor positioning.

Explore our Year-Ahead Investment Outlook for 2025 and see our forecasts and potential investment opportunities amidst the evolving economic and market landscapes.

The Federal Reserve kicked off this easing cycle with a jumbo 50-basis point (bp) rate cut and appears committed to continue lowering interest rates at a reduced quarter percent pace to return to neutral.