Outlook: Monitoring for higher volatility and repricing of term premia across developed market government yield curves, particularly as global central bank policies diverge. Steeper curves should enhance roll and carry opportunities.

Outlook: Carry conditions. MBS carry remains intact vs. intermediate Treasuries despite tight spreads. We favor a barbell position consisting of near-par coupon and low coupon 30-year issues, while avoiding the middle of the stack. We are underweight higher coupons amid call risk concerns, and we continue to prefer specified pools over TBAs for better fundamental value and convexity.

Outlook: Carry conditions. Spreads generally widened in 2025, yet remain tighter than average. Given the sector’s flat credit curves, valuations on high-quality securitized assets remain attractive relative to other fixed income sectors. Our outlooks for CMBS, RMBS, CLOs, and ABS reflect tighter-than-average spreads and stabilizing or weakening underlying asset fundamentals, supporting carry conditions with limited potential for capital appreciation. We continue to focus on tranches at or near the top of capital structures and remain highly selective of more credit-sensitive positions as downside risks outweigh the rewards. Positive ABF flows continue, and we are targeting structures suited to perform through the cycle in residential, commercial, and prime consumer subsectors.

Outlook: Carry conditions. While spreads may widen in the short term, economic resilience, supportive yields, sound technicals, and stable credit fundamentals should help keep spreads near historical tights. However, the current environment is considered ripe for M&A—especially as companies seek AI-related cost efficiencies. We generally anticipate that heavier issuance will lead to some softening in technicals and credit fundamentals.

Outlook: Carry conditions. We expect spreads to maintain a range near historical tights as persistently strong technicals and a robust credit environment offset prevailing global macro risks. While still constructive overall, we maintain our close-to-home defensive positioning across all regions. Late-cycle conditions in direct lending warrant greater selectivity on new deals, heightened attention to lender protections, and an emphasis on add-on opportunities with existing portfolio companies.

Outlook: Modest spread tightening and attractive carry conditions. EM economic growth and improving fundamentals continue to attract flows into the sector despite tight spread levels. With the appropriate identification of bottom-up alpha opportunities, EM hard currency returns could still reach the high-single digit range. The return trajectory for EM corporates should also remain positive. Due to stretched valuations, we are cautious on EM rates, and, in EMFX, we expect the U.S. dollar to maintain its weakening bias.

Outlook: Carry conditions. All-in yields, healthy fundamentals, and relative value opportunities will likely support demand going forward. The combined effect of anticipated Fed rate cuts and steep muni curves should help to mitigate potential volatility and encourage investors to extend duration.