Key central banks continue the rate cutting cycle – Amid softening growth and easing inflation the Fed and the ECB continued cutting their respective interest rates. Hence, the key question on the market refers to timing and pace of the future cuts. Notably, both institutions underscore the data-dependency on the decision-making.
Trump could reignite inflation – President-elect’s proposed policies (on tariffs, tax cuts, immigration) may give a fresh boost to US inflation, pushing Fed to keep the rates higher for longer. Markets have reduced the rate cut expectations to only 3 over the 2025.
Attractive opportunities across the spectrum – Granularity of the fixed income market offers investors opportunities to choose the best match according to their risk-return preferences. BlackRock Investment Institute favors intermediate credit, that offers similar yields to longer-dated bonds, but is exposed to less interest rate risk.
Regional markets
In regional sovereign Eurobond markets Georgia and Armenia showed the largest drop in yields (-44.7bps and -39.9bps respectively). Uniform dynamic was observed in Georgian corporate Eurobond market with all Eurobonds experiencing declines in yields.
