The Weekly Fix

The rapid AI infrastructure buildout draws capital from bonds, banks, and utilities – creating potential for concentration risk exposure.Neil Sun, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down how Artificial Intelligence (AI) infrastructure funding is reverberating throughout public and private credit markets. Hyperscalers are tapping public bonds, private infrastructure capital, and bank construction loans simultaneously—turning what looks like diversified exposure into overlapping bets on the same AI buildout theme.Banks and utilities are ramping up debt issuance, as utilities fund rising power demands and banks manage expanding balance sheets, compounding market pressure across sectors.What once appeared as well-diversified cross-sector allocations may now represent concentrated exposure to a single mega-theme, as the AI buildout channels through every corner of the credit market.

Historic Fed discord meets Middle East uncertainty: The most dissenting votes since 1992 expose deep divisions as geopolitical risks and energy prices complicate the path forward for U.S. monetary policy.Laurie Mount, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down last week's Fed meeting where rates held steady, but unprecedented internal disagreement and Middle East tensions introduced new market volatility.Fed members showed record division on policy direction—the first time since 1992 the committee has revealed such internal disagreement, with markets reacting swiftly to the unexpected discord.Middle East conflict now officially factors into Fed thinking, with the statement acknowledging geopolitical uncertainty and rising global energy prices as key considerations for future policy decisions.Leadership transition unfolds as Kevin Warsh's nomination advances through the Senate while Chair Powell commits to staying on as governor temporarily amid legal pressures facing the institution.

A fragile equilibrium in fixed income: high yields persist despite tight conditions, creating potential opportunities for disciplined credit selection.Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how elevated yields and tight spreads create a deceptively simple market environment that may reward active security selection and quality upgrades.Attractive yields meet tight conditions: credit markets currently offer equity-like income levels, but the cushion against market volatility is thinner than historical norms suggest.Selectivity becomes essential in late-cycle markets. With real differences emerging between strong and weak performers, choosing the right securities matters more than riding broad market trends.Upgrading credit quality and avoiding overly risky exposures while identifying overlooked opportunities helps investors capture income without overextending.

Current energy shocks collide with restrictive monetary policy, creating a different challenge for fixed income investors than 2022. Mindy Gudmundson, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how today’s potential inflation shock differs from a few years ago, and why timing may matter for bond investors positioning ahead of a perceived peak.Today's energy shock hits an economy already operating under tight monetary conditions, creating stagflation risks that contrast sharply with 2022's zero-rate environment. Headline CPI heading toward 4% while growth slows materially below early-year expectations, with consumer sentiment reaching all-time lows amid elevated prices. Curve steepening presents potential opportunity as short rates approach their peak with inflation topping out, while fiscal concerns and growth anxiety pressure the long end.

Markets bounced back, but some investors still aren't buying it. Despite the recovery in equities, positioning remains cautious as high yield fundamentals hold firm.Tim Leary, Senior Portfolio Manager on RBC GAM's BlueBay Leveraged Finance team, discusses the evolving dynamics between quality carry and market timing in today's environment.The S&P recovered to flat for the year, yet investors seem to remain split between thinking they missed the rally and expecting another drop.High yield tech companies show stronger balance sheets and more diverse investor interest than their private credit counterparts, despite concerns around AI and private debt.Nearly 90% of the US high yield market carries BB or B ratings, offering potentially consistent income as private credit markets face redemption pressures.

Quality over risk in volatile markets: Middle East tensions are influencing bond investors toward safer U.S. positions while energy prices create challenges across global economies.Andrzej Skiba, Head of U.S. Fixed Income on RBC GAM's BlueBay U.S. Fixed Income team, breaks down how geopolitical events are shaping bond strategies and why regional economic exposures differ significantly.Markets have recovered on hopes for diplomatic progress, though uncertainty around Iran negotiations remains given strategic considerations over key shipping routes.So far, U.S. economic exposure appears more limited due to energy independence, while Europe and Asia may face heightened recession risks from energy price pressures.Investment approach emphasizes high-quality U.S. bonds over riskier options, with selective credit criteria and protective strategies to manage current market conditions.

A new $55B deal rewrites the leveraged buyout playbook with equity-heavy financing.Jeff Jablons, Senior High Yield Analyst covering telecom, cable, satellite, and technology sectors on RBC GAM's BlueBay U.S. Fixed Income team, examines how a video game company’s take-private deal shatters conventional leveraged buyout dynamics.The capital structure flips convention with $36 billion in equity versus just $18 billion in debt, reversing the typical 60-75% debt ratio seen in traditional LBOs.Saudi Arabia's Public Investment Fund anchors this unprecedented deal with a $30+ billion equity commitment, demonstrating the power of sovereign-scale capital backing.Strong investor demand across US and European debt markets suggests continued appetite for large, complex deals despite Q1 volatility.

Cut expectations evaporate: Federal Reserve easing bets collapsed after March meeting as geopolitical risks and inflation concerns pushed rate hike probabilities above cut scenarios for the first time since last month's two-cut consensus.Eric Hathaway, Portfolio Manager on the BlueBay U.S. Fixed Income team, explores three catalysts that could revive rate cut expectations despite current hawkish sentiment.Labor market weakness deepens beneath surface as February nonfarm payrolls fell 92,000 jobs with December revised from +48,000 to -17,000, suggesting unemployment could drift higher and force Fed reconsideration.AI-driven displacement moves from theory to reality as major institutions plan significant workforce reductions, with economists estimating 5-10,000 monthly job losses in exposed sectors could expand into broader white-collar slowdown.Private credit stress could tighten financial conditions independently as defensive lenders, wider spreads, and clogged refinancing channels may prompt Fed action before full recession materializes.The path forward becomes clearer when growth concerns override inflation fears.

Private credit's software problem creates a potential opportunity for high yield as exposure gaps reveal structural vulnerabilities in direct lending portfolios.Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, analyzes how AI-driven repricing may redirect capital flows across credit markets.Widespread credit repricing pushes spreads to widest levels since last year, driven primarily by software sector concerns, while energy tightens on geopolitical supply pressures.Direct lending holds over 30% software exposure compared to less than 4% in high yield, concentrating AI displacement risk where liquidity is most constrained and underwriting scrutiny intensifying.Investors pausing private credit allocations may find natural alternatives in today's higher-quality, more liquid high yield market with minimal software sector overlap.

Corporate credit faces volatility as private credit stress rises, AI divides borrowers, and IG primary strength masks widening dispersion.Neil Sun, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how stagflation-style stress and cross-asset volatility are reshaping the credit landscape and potentially creating selective opportunities.Private credit deterioration is accelerating as BDCs report rising nonaccruals and questionable loan valuations while higher rates expose overleveraged structures in this illiquid corner of the market.AI infrastructure spending creates a credit divide where mega-cap tech maintains robust capital access for data centers and long-term investments while software and leveraged borrowers face intensified scrutiny on business model durability.Strong IG primary demand and open funding markets contrast sharply with rising dispersion in financials and insurance sectors, presenting entry points in defensive high-quality bonds as heavy supply and macro volatility reset spreads wider.

Positioning pays off: Conservative allocations and incoming cash flows shield high yield investors from geopolitical volatility that rattled broader markets.Peter Keenan, Senior Credit Trader on RBC GAM's BlueBay U.S. Fixed Income team, examines how cash flows and positioning created an unexpected buffer against Middle East tensions.High yield bonds showed resilience despite heightened Middle East tensions and surging oil prices on supply concerns from potential Strait of Hormuz disruptions.Conservative positioning and substantial incoming cash from coupons, calls, and maturities created buying pressure in a market where geopolitical uncertainty sidelined new corporate issuance.Treasury markets repriced sharply as investors unwound long positions, recalibrating expectations for Fed policy amid concerns about persistent inflation from rising energy costs.

RBC’s BlueBay Fixed Income team discusses how US markets have shown resilience with contained inflation, though heavy tech sector debt issuance from AI investment creates credit market pressure while raising questions about potential future inflationary risks.January CPI rose just 0.2% monthly and 2.4% annually, below consensus, keeping two 2026 rate cuts priced in.Technology sector's elevated 2026 capex projections are generating significant new supply in investment grade credit markets, creating technical spread pressure while high yield remains well positioned.The AI investment cycle presents dual risks—whether monetization will justify near-term spending and whether competition for resources could generate inflationary pressure before productivity gains materialize.

Trump nominates Warsh for Fed chair as new governors potentially reshape this year’s rate outlook.Laurie Mount, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down how FOMC leadership changes and political headwinds are shaping the Fed's uncertain 2026 policy path.Rates held at 3.50–3.75% as four hawkish members joined, though dissents from Governors Miran and Waller favored easing.Warsh's Fed chair nomination faces Senate opposition pending a DOJ investigation into Powell.Money market balances near $8 trillion as investors appear to favor short-duration positions.

Will tighter spreads hold as supply floods the market?Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, discusses the Fed's steady approach and how heavy corporate issuance is shaping the credit landscape.The Fed is expected to hold rates this week, with the potential for up to 3 cuts later in 2026. Corporate fundamentals remain solid, though shorter-dated bonds may offer advantages as front-end rates potentially decline.Heavy corporate borrowing for AI spending, tech earnings results, and geopolitical tensions could impact spreads and bring volatility in Q1.

Signals of strength? U.S. banks’ Q4 earnings highlight steady fundamentals and confidence heading into 2026.John Guarnera, Senior Corporate Analyst on RBC GAM's BlueBay U.S. Fixed Income team, analyzes the latest bank results and their implications for both economic fundamentals and sector positioning.Investment banking surged—M&A advisory revenues climbed over 40% in some banks—while equity trading gains point to optimism in capital markets.Asset quality remains stable across lending verticals, dispelling concerns around fraud events seen earlier in the year.Loan growth in commercial sectors and steady deposits reinforce banks' sector momentum and ability to navigate credit and regulatory changes.

Tight spreads, tighter credit: What’s next for high-yield?Tim Leary, Senior Portfolio Manager on RBC GAM’s BlueBay U.S. Fixed Income team, shares insights on high-yield market dynamics and potential credit risks in the year ahead.Spreads across high-yield markets remain tight, supported by strong investor interest and steady issuance.High-yield bond issuance can align with positive returns, underscoring resilience in market performance.Trump’s proposal to cap credit card fees at 10% could hurt borrowers, with subprime consumers likely facing reduced access to credit.

A year of high returns or high risks? Fixed income markets look to navigate 2026’s key challenges.In the latest edition of The Weekly Fix, Andrzej Skiba, BlueBay Head of U.S. Fixed Income at RBC GAM, explores a strong fixed income outlook for the new year, driven by carry income and economic momentum. However, the year also brings critical questions about monetary policy, the AI-driven capital wave, and heavy credit issuance.High single-digit returns may be achievable, supported by carry income and projected economic growth.Inflation remains above target, and potential rate cuts could hinge on changes at the Fed.Credit markets may contend with heavy issuance, posing questions about demand and spread levels.

Amid high-short term rates and diverging Fed opinions, investors have turned to money market funds, waiting for clarity on the economic outlook.In this week’s episode, Laurie Mount, Portfolio Manager with RBC’s BlueBay U.S. Fixed Income team, highlights key trends shaping cash management strategies:The Fed lowered the fed funds rate by 25 basis points to 3.50–3.75%, with varied perspectives on the pace of rate adjustments.Money market assets surpassed $8 trillion, fueled by elevated short-term rates and cautious investor sentiment.Looking ahead, 2026 may bring key labor market developments critical to inflation, growth, and further potential Fed cuts.

Is the AI boom testing market limits, or uncovering new opportunities in fixed income for 2026?Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, explores the outlook for U.S. fixed income markets in 2026, focusing on Federal Reserve policy, the credit cycle, and the impact of surging AI-driven debt issuance.We expect a hawkish rate cut to close 2025, signaling a dovish path ahead, with more cuts expected in 2026 as U.S. growth reaccelerates.Despite tight spreads, stronger credit quality and rising volatility create opportunities for idiosyncratic spread compression trades.Record AI-related debt issuance may lead to short-term dislocations, but diversified funding channels and sustainable growth in AI point to resilience.

Mindy Gudmundson, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, explores how the longest-ever government shutdown has led to a data backlog, intensifying bond market volatility and uncertainty surrounding December’s FOMC rate decision.The 43-day government shutdown delayed critical economic data releases, distorting analysis and increasing market volatility as investors navigate incomplete information.U.S. Treasury yields experienced sharp movements, closing above 4.05%, as markets priced in a potential Federal Reserve rate cut in December.Investor tensions remain elevated amid rate-cut speculation, stock-market instability, and persistent macroeconomic ambiguity, driving interest in fixed-income securities.

With more volatility potentially on the horizon, we believe US High Yield bonds can provide a ‘port in the storm’. Tim Leary, Senior Portfolio Manager on RBC GAM’s BlueBay U.S. Fixed Income team, explains how US High Yield (HY) bonds have continued to stand out as a reliable option for generating income while managing rate risk during periods of market uncertainty.The US HY index currently provides an Option Adjusted Spread (OAS) of 307 bps with a duration of just over 3 years, widening 14 bps this year despite a 7% return.Compared to US Investment Grade (IG) corporates, which yield 83 bps with a 6.4-year duration, HY bonds have offered higher income potential with notably lower interest rate exposure.With economic data releases expected to drive rate volatility, well-rated HY bonds have continued to deliver steady interest income for investors managing through changing conditions.

Big Tech is reshaping the bond market. Are investors ready for Silicon Valley’s mega issuances?Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, discusses a tectonic shift in Silicon Valley’s funding strategy. Once cash-rich with pristine balance sheets, major tech companies are now tapping the investment-grade bond market to finance their soaring AI-related capital expenditures.Silicon Valley's debt strategy shift, including $75bn in recent issuances, shows tech giants are prioritizing debt over equity due to tight spreads and tax advantages.Multi-tranche deals across maturities, from 5 to 50 years, are catering to robust demand from insurance and pension funds seeking durable and high-rated bonds.For investors, the short-term market impact may feel bumpy with wider spreads, but this creates valuable opportunities to grab highly rated mega-cap bonds at more attractive valuations.

Divided Fed, uncertain future: Powell’s cautious tone raises questions about policy shifts ahead.Laurie Mount, Portfolio Manager with RBC GAM’s BlueBay US Fixed Income team, highlights the Federal Reserve's recent rate cut and its impact on cash strategies amid ongoing economic uncertainties.The Fed lowered the fed funds rate by 25 basis points to 3.75–4.00%, while signaling caution regarding December cuts due to labor market risks and committee divisions over inflation concerns.Fed Chair Powell warned against assuming another rate cut soon, citing a lack of data due to the government shutdown, which has already led markets to cut December rate cut predictions significantly.In response, our team is prioritizing floating-rate securities and short-term fixed-rate assets under one year, vigilantly analyzing Fed communications and economic data to adapt to evolving conditions.

Systemic risk, or just unusual events? Recent market turbulence leaves some questions about how long high valuations and tight spreads will continue.Anne Greenwood, Institutional Portfolio Manager on RBC BlueBay’s US Fixed Income team, discusses the current market landscape and opportunities for active managers.Equities at record highs and tight credit spreads indicate market resilience, despite recent jitters.Lower-quality high-yield bonds and leverage loans require caution due to deteriorating credit metrics and increased default rates.Active managers may be able to capitalize on volatility by providing liquidity and generating strong risk-adjusted returns in fundamentally stable companies.

Credit cycle deterioration? Not so fast- new earnings reports from the banking sector ease fears of financially stretched consumers and companies.John Guarnera, Senior Corporate Analyst on RBC BlueBay’s US Fixed Income Team, explores the latest data from US banks and an outlook on recent credit market developments.Third-quarter earnings from major US banks revealed stable asset quality and improved credit metrics.Banks' balance sheets remain robust, with high capital levels and strong liquidity, supporting their ability to manage potential risks.Consumer and commercial credit trends show improvement, with delinquency metrics stabilizing across prime and subprime markets.

US High Yield continues to perform well this quarter- but geopolitical volatility demands strategic positioning.In this edition of #TheWeeklyFix, Charlie Whinery, Portfolio Manager on RBC BlueBay’s US Fixed Income Team, breaks down Q3's strong performance and how his team is navigating current market dynamics.US HY delivered solid 2.4% returns in Q3 with robust $140B issuance, low leverage levels, and healthy interest coverage ratios well above historical norms. Geopolitical risks create uncertainty - Trump's tariff threats on Chinese goods sparked volatility, making front-end positioning a potential strategic advantage.

Amid a shifting market landscape, fixed income strategies are evolving to uncovervalue in key sectors.Andrzej Skiba, Head of BlueBay U.S. Fixed Income at RBC GAM, shares how his team is navigating today’s market dynamics while seeking to position for strong returns in 2026.Favoring curve steepeners for U.S. interest rate exposure, with resilience expected unless inflation drops significantly or fiscal deficits shrink unexpectedly.Generic corporate credit spreads remain unappealing, prompting a focus on idiosyncratic opportunities in sectors like California utilities, chip manufacturing, and US housing.We anticipate high single-digit returns in investment grade and high yield fixed income, supported by multiple rate cuts and U.S. growth above 2%.

New GDP data shows economic growth, but labor market and political risks keep markets on edge.Mindy Gudmundson, Institutional Portfolio Manager with RBC BlueBay’s US Fixed Income team, breaks down the latest economic data and key developments shaping markets.Second-quarter GDP revised to 3.8%, driven by strong consumer spending, while jobless claims fell, easing labor market concerns.This week’s labor market data will be critical in shaping expectations for Federal Reserve rate cuts.A potential government shutdown could delay key economic data releases but is unlikely to significantly impact the broader economy.

The Fed’s rate cut is in, just as the market expected – what’s next for the future of monetary policy? Laurie Mount, Portfolio Manager with RBC BlueBay’s U.S. Fixed Income team, unpacks the Federal Reserve’s latest rate cut, economic projections, and what it all means for investors.The Fed cut rates by 25 basis points, lowering the target range to 4.00–4.25%, with projections showing stronger growth, higher inflation, and lower unemployment through 2026–27.Diverging views among FOMC members reveal uncertainty, with projections ranging from no more cuts to a 100-basis point reduction by year-end 2025.Chair Powell described the cut as a risk management move, emphasizing a data-dependent approach amid shifting risks to labor markets and inflation.

Can Fed policy ease the housing affordability crisis?Teri Savage, Senior Mortgage Trader with RBC BlueBay’s Fixed Income team, explores the pressures on the U.S. housing market and the potential impact of upcoming policy changes.Home prices continue to outpace income growth, while 30-year mortgage rates remain stubbornly above 6%, pushing affordability to record lows.The Federal Reserve is expected to cut the Fed funds rate, which could drive down Treasury yields and, in turn, lower mortgage rates to help ease affordability pressures.Mortgage investors should remain flexible and closely monitor policy developments, as the administration prioritizes lowering rates to address housing market challenges.Understand how these dynamics could shape the housing market and investment strategies.

Senior portfolio manager Tim Leary discusses how weaker job growth and strong bond market activity, coupled with tight spreads, support expectations for a September rate cut and continued favorable conditions for fixed-income markets.Weaker job data and key events like Jackson Hole and August payrolls pave the way for a September rate cut. Strong technicals in the US bond markets persist, with significant issuance and demand driving tighter spreads, lower yields, and favorable pricing. The S&P showed minor volatility, while the Russell 2000 demonstrated stronger risk sentiment, reflecting optimism in HY markets due to overlapping names. This leads us to prefer fixed coupons over variable in fixed income credit markets.

Corporate credit spreads are at historic lows – will September’s bond supply shake up the market? Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, analyzes the tightest corporate bond spreads in decades and highlights potential opportunities.Investment-grade corporate bond spreads are near 80 bps over Treasuries, driven by strong demand despite slim risk compensation.With $130-150bn in new corporate issuance expected, the market’s ability to absorb supply without widening spreads will be tested.Long-term conditions support a bullish credit stance, but near-term widening may create selective re-entry opportunities for investors.

Fed Chair Powell excited investors last Friday with hints of a potential September rate cut. What’s next for credit markets?Anne Greenwood, Institutional Portfolio Manager with RBC BlueBay’s Fixed Income team, breaks down the market reaction to the Jackson Hole Symposium.Fed Chair Jerome Powell signaled the potential for a September rate cut, citing balanced labor markets and easing inflation risks.U.S. risk assets remain well supported, but heightened uncertainty and a wide range of outcomes suggest volatility is likely to persist.It is important to maintain a cautious approach to credit risk and liquidity as markets prepare for seasonal shifts in debt supply.

All eyes are on Jackson Hole this week as investors digest recent economic data and look ahead to the Fed’s next moves.Mindy Gudmundson, Institutional Portfolio Manager with RBC BlueBay’s U.S. Fixed Income team, breaks down the latest inflation data, rate cut expectations, and what to watch ahead of Chair Powell’s Jackson Hole speech.Headline inflation dipped to 2.7%, nearing the Fed’s target, but core CPI rose to 3.1%, keeping inflation risks in focus.Markets expect a 25 bps cut in September, with more cuts likely in the months ahead.Chair Powell’s speech in Jackson Hole is expected to provide clarity on the timeline and scope of policy easing.

BlueBay Senior Trader Peter Keenan highlights key themes following the most recent inflation data release.  Inflation Data Overview: July's Consumer Price Index (CPI) rose 0.2% month-over-month (headline) and 0.3% excluding food and energy, with year-over-year increases of 2.7% (headline) and 3.1% (core), aligning with expectations. Market and Fed Expectations: Markets now price a 96% chance of a 25 bps rate cut in September, up from 86% pre-CPI release. The Jackson Hole Symposium (Aug 21-23) is expected to signal further monetary easing, consistent with the Fed's potential 1-2 rate cuts this year.Economic Outlook: Despite a slowing pace of activity below 2% in late 2025, deregulation and policy easing may support economic growth into 2026. Corporate earnings have remained resilient, countering concerns of deeper economic trouble.

BlueBay Portfolio Manager Laurie Mount discusses how the fallout from Friday’s lousy jobs report could dominate Washington and Wall Street for some time.The July jobs report fell significantly below expectations, with only 73,000 jobs added versus the forecasted 104,000, while the unemployment rate rose to 4.2%, signaling a potential softening in the labor market.Treasuries rallied sharply, and markets have now fully priced in two Federal Reserve rate cuts by year-end, reflecting growing expectations for monetary easing.The FOMC's recent decision to hold rates steady saw rare dissent from two Governors, highlighting internal debate over balancing risks to growth and inflation amid ongoing tariff and labor market concerns.The Federal Reserve's data-driven approach will focus on upcoming CPI releases and jobs reports, with portfolio strategies being adjusted to prepare for potential lower interest rate environment.

Investment-grade bonds are having a strong year, but investors aren’t getting complacent.Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, discusses how portfolio managers are hedging their credit exposure despite a compelling market environment.Yields remain attractive, inflows are strong, and performance is solid—even with tight credit spreads.Managers are staying cautious, holding high-conviction positions while using hedging strategies like credit default swaps and options to protect against downside risks.In today’s market, managing risk is just as important as finding yield. Strategic hedging ensures portfolios stay resilient, no matter what comes next.Staying invested doesn’t mean flying blind. Active risk management is key in tighter markets.

Fed policy and credit markets are at a pivotal moment.Andrzej Skiba, BlueBay Head of U.S. Fixed Income, gives an update on monetary policy trends and their effects on the market:The Fed is unlikely to cut rates in July but may deliver 1-2 cuts by year-end, depending on trade developments and inflation trends.Treasury markets reflect expectations of more aggressive rate cuts under future Fed leadership, supporting a preference for U.S. curve “steepeners.”Strong technicals are driving credit market activity as investors lock in yields amid limited new issuance. Active management remains essential to uncovering value in tighter spreads. As markets navigate shifting policy expectations and credit opportunities, staying agile is more important than ever.

TACO trade or GAIN trade? Markets brace for tariffs and bank earnings.Tim Leary, Senior Portfolio Manager on the BlueBay US Fixed Income team, dives into the macro and trade themes driving markets as the summer lull in new issuance takes hold. Markets are eyeing the August 1st deadline for potential 30% tariffs on Europe, with optimism that a resolution will be reached.US GSIBs and regional banks kick off 2Q earnings this week, with a focus on asset quality, macro outlooks, and shareholder distribution plans.US High Yield bond market liquidity is at record highs, with daily trading volumes up 14–19% year-over-year, signaling a more tradeable and robust market.With strong technicals, tighter credit spreads, and optimism around 2Q numbers, the market is navigating the balance between opportunity and risk.

As we pass the mid-year mark, @Andrzej Skiba, Head of BlueBay U.S. Fixed Income, breaks down how fixed income markets are shaping up for the second half of the year. With spreads at multi-year tights and bullish market positioning, the opportunity set is narrowing, but there’s still value to be found for active investors.From reallocating to sectors like insurance and utilities to exploring subordinated debt and non-agency MBS, Andrzej explains how we’re staying constructive while moderating risk. With volatility likely to rise later this summer, strategic credit hedges and tactical reallocations are keeping portfolios nimble and ready for what’s next.

Don’t fight the Fed – or the American consumer.Tim Leary, Senior Portfolio Manager on the BlueBay U.S. Fixed Income team, highlights the resilience of the U.S. consumer, with cash balances at a record $21.7 trillion and credit card utilization rates back to normal.As High Yield bonds outperform and spreads tighten, the strength of the American consumer could drive inflows into credit markets, offering opportunities for investors looking beyond equities at all-time highs.

Strong inflows. Low issuance. High cash balances. Peter Keenan, Senior Trader on the BlueBay U.S. Fixed Income team, explores why High Yield is holding strong. $5.3B in YTD inflows, led by fast-moving ETF moneyLimited new issuance – currently -18% vs. last yearElevated cash balances and muted dealer inventoriesIf geopolitical risks ease and issuance remains slow, spreads could have room to tighten from here.

Debt ceiling drama. Bill curve dislocation. Fed in holding pattern.Laurie Mount, Portfolio Manager on the BlueBay US Fixed Income team, breaks down the latest on debt ceiling negotiations and explains how the shrinking supply of Treasury bills is creating distortions in the bill curve, noting yields on some maturities topping 4.3%.With record cash in money market funds and the Fed expected to stay patient, Laurie shares how she’s managing risk while staying liquid and flexible in an evolving rate environment.

Tight spreads. Strong demand. What gives?Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, explains why Investment Grade credit is attracting yield-hungry investors despite spreads returning to their tighter range. He also highlights where sector dispersion is creating value and why active, selective positioning is essential in today’s market.It’s a bond buyer’s market, if you know where to look.

Is the U.S. housing market cooling, or just normalizing? Eric Hathaway, Senior Portfolio Manager on the BlueBay U.S. Fixed Income team, unpacks the latest housing data, including the first national home price decline in over two years, and shares what it means for market participants. Despite affordability challenges and slower sales, mortgage-backed securities remain resilient, backed by healthy consumer balance sheets and historically low loan losses.

Tim Leary, senior portfolio manager on the BlueBay U.S. Fixed Income team, unpacks the tension between soaring defense spending, expanding social programs, and ballooning deficits. While some worry about the dollar’s status and long-term fiscal sustainability, Tim highlights why today’s bond market is offering real, risk-adjusted yield opportunities.

Moody’s just stripped the U.S. of its last remaining Aaa credit rating. But what does it actually mean for markets? Jeff D’Auria shares why the downgrade to Aa1 shouldn’t come as a surprise and, despite symbolic headlines, fundamentals and positioning tell a more nuanced story.With technicals strong and institutional demand holding steady, the bigger story may be how yield curve dynamics evolve amid ongoing policy uncertainty.

Trade headlines, tariffs, and central bank caution – this week brought no shortage of market-moving news. Laurie Mount, Portfolio Manager on the BlueBay US Fixed Income team, breaks down the latest:A new U.S.-UK trade deal (with more to come)A 90-day tariff pause with ChinaThe Fed’s “wait-and-see” approach amid rising inflation and employment risksWith April CPI and retail data on deck, markets are watching closely.

It’s one of the riskiest trades hiding in plain sight: the Treasury basis trade.In today’s episode of The Weekly Fix, Neil Sun, Portfolio Manager on the BlueBay US Fixed Income team, unpacks the Treasury basis trade and how it works, why it’s grown to a $600B+ behemoth, and what could go wrong. In a market built on leverage, even small cracks can cause big waves.Neil explains why regulators are watching closely, and what investors should monitor going forward.

After a volatile start to April, High Yield markets are regaining momentum. Peter Keenan, Senior Trader on the BlueBay US Fixed Income team, discusses the rally off post-Liberation Day lows, what new issue performance tells us about investor demand, and why liquidity in the secondary market remains strong. With earnings season in full swing and Treasury yields swinging, Peter shares why patience and a sharp eye for quality remain key for credit investors right now.