In an environment where global markets refuse to bend to the macro turbulence, our third quarter outlook looks at the attributes that make this a bond bull market of distinction as it enters the second half of 2025. We also provide an assessment of the macroeconomic backdrop and share our sector views for the third quarter and beyond.
Q3 2025 Agency MBS OutlookThird quarter 2025 market outlook for Agency MBS provided by Andrew Harnischfeger, CFA, Portfolio Manager, Agency MBS.
Q3 2025 Asset-Based Finance OutlookThird quarter 2025 market outlook for Asset-Based Finance provided by Oliver Nisenson, Head of Asset-Based Finance.
Q3 2025 Developed Market Rates OutlookThird quarter 2025 market outlook for Developed Market Rates provided by Mick Meyler, Head of Developed Market Rates.
Q3 2025 Emerging Market Debt OutlookThird quarter 2025 market outlook for Emerging Market Debt provided by Pradeep Kumar, PhD, CFA, Portfolio Manager, Emerging Markets Debt.
Q3 2025 IG Corporate Bonds OutlookThird quarter 2025 market outlook for Investment Grade Corporate Bonds provided by Ashley Wieseltier, CFA, Portfolio Manager, U.S. IG Corporate Bonds.
Q3 2025 Municipal Bonds OutlookThird quarter 2025 market outlook for Municipals provided by Jason Appleson, CFA, FRM, Head of Municipal Bonds.
Key Convictions & Investment Themes
Learn more about the three themes that shape our quarterly fixed income outlook:
Strategic Buy Zone for Bonds
The 2022 bear market lifted yields to levels not seen for more than a decade, positioning fixed income markets—particularly the higher-yielding sectors—for solid, long-term returns. That backdrop remains, as do the uncertainties that will rattle markets over the near term. Bottom line: Bonds are positioned for solid returns, and they should outperform cash and equities if serious downside risks materialize.
Bond Bull Market of Distinction
With the markets finely balanced between conflicting forces of monetary and fiscal policies, geopolitical tensions, and tariffs, performance dispersion across yield curves and credit sectors has ranged widely from positive to negative returns. The dispersion indicates that just buying bonds won’t do; success will hinge more than ever on buying the right bonds in the right maturities and market sectors.
Let Fundamentals be your Guide—Look Through the Noise to Find the Signal
As participants struggle to map their course amidst the cascade of headlines, markets have been prone to dramatic overreactions and course corrections. The lesson for investors is clear: don’t confuse extreme market movements with changes in fundamentals. Rely on research and analysis to distinguish the market spasms from true changes in underlying value, and capitalize on reversions back to fundamentals.
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