U.S. Treasuries posted a strong finish to November, gaining +0.8% for the month, as Scott Bessent’s nomination as Treasury Secretary and softer-than-expected macroeconomic data provided a supportive backdrop.

Diverging economic trajectories widen the transatlantic gap, as resilient U.S. growth reshapes Fed policy expectations while Europe grapples with recession risks and deflationary pressures, driving contrasting bond market dynamics.

While U.S. Treasury volatility remains elevated, credit spreads show resilience, reflecting market optimism, even as fiscal uncertainties and rising rates weigh on global bond markets.

Post-election relief in U.S. Treasuries brought temporary calm, but bond markets remain cautious as Trump’s fiscal policies and central bank adjustments hint at potential inflationary pressures and heightened volatility in the months ahead.

In October, fixed income assets faced significant challenges, with the Global Aggregate Bond Index declining over 3%. As the U.S. elections approach, this week is poised to be crucial in determining the future trajectory of the fixed income market.

With the U.S. term premium turning positive amidst rising bond market volatility, fixed-income markets are facing growing caution as central banks ease, credit markets stabilize, and investor attention pivots towards the U.S. elections, which could shape future fiscal policy.

With synchronized global monetary easing in full effect and U.S. elections just weeks away, bond markets face rising volatility and potential shifts, with inflation risks and fiscal policies likely to play a pivotal role in shaping the near-term outlook.

Rising geopolitical tensions and inflation concerns pushed U.S. 10-year Treasury yields to 4.1%, as market expectations shifted towards a higher U.S. terminal rate, reflecting increased uncertainty.

After a week of better-than-expected U.S. economic data and rising oil prices, bond markets adjusted their expectations, now aligning with the Fed's forecast of two rate cuts by year-end, removing a previously anticipated full cut.

Despite mixed economic data, bonds remained flat over the week, with emerging market bonds outperforming, driven by Chinese stimulus measures.