Buoyant primary market activity and flows continue to support credit and EM debt markets, while government bonds reverse course amid reassuring economic data as markets revised down central banks’ rate cut prospects.

US bonds had a strong month, with both interest rates and credit spreads lower, while European fixed income had to discount higher than expected German government bond issuances and the possible end of the ECB rate cut cycle.

Central banks’ cautious shift toward easing has buoyed bonds and credit globally, even as pockets of risk linger. U.S. and European yields dipped on policy signals, credit spreads stayed near cycle lows, and emerging debt outperformed amid renewed inflows.

As weakening core inflation clashes with a sudden 13% surge in oil due to Middle East tensions, central banks find themselves at a difficult crossroads—caught between easing hopes and renewed inflation pressure.

Robust U.S. job data drove global bond yields higher and curtailed market hopes for near-term rate cuts, yet credit spreads tightened as investors embraced risk, enabling most fixed income sectors to notch gains despite central banks’ cautious stance.

Global fixed income enjoyed a relief rally this week as cooling inflation data and a temporary reprieve on tariffs bolstered sentiment, while major central banks reaffirmed a patient, data-driven policy stance.

Rate markets were shaken this week by rising concerns over U.S. fiscal discipline and renewed tariff threats, prompting a sharp adjustment in Fed rate cut expectations and putting long-end yields and credit under renewed pressure.

Long-end yields rose across developed markets, led by Japan’s 30-year breakout to a 25-year high, while cautious central bank messaging and supportive credit dynamics helped sustain risk appetite across fixed income.

Global fixed income markets found stability last week amid easing U.S.–China trade tensions, while Japan's 30-year government bond yield surged to a 25-year high, reflecting shifting investor sentiment and inflation expectations.

Falling volatility has supported a rebound in global fixed income markets, yet persistent macro uncertainty—centered on trade tensions, political interference, and diverging policy paths—continues to cloud the outlook.