1Q26 Fixed Income Outlook
1-6-26
KEY TAKEAWAYS:
- Economic Stability with Risks: The U.S. economy remains resilient, supported by strong consumer
spending despite elevated inflation and housing costs. - Fed Policy Impact: Three rate cuts in 2025 lowered short-term rates; inflation remains above target.
- Market Trends: The Yield curve is normalizing and steepening; credit spreads remain tight, driven by
strong demand for corporate bonds. - Investment Strategy: Attractive bond yields make this a good time to increase allocations to high-quality,
investment-grade fixed income for liquidity and principal protection.
