Bonds in 2025: Are They Still a Safe Haven?

Introduction: With changing interest rate expectations and tight credit spreads, the fixed-income market presents unique challenges and opportunities. Here’s an analysis of key bond market trends.

1. U.S. Treasury and Credit Market Outlook

• Fed rate policy and its influence on bond yields.
• Credit spreads at historically tight levels, limiting excess returns.

2. Emerging Markets Debt: A Risk-Reward Tradeoff

• Relative valuation compared to corporate credit.
• Impact of dollar strength on emerging markets.

3. Asset-Backed Securities: The Preferred Bond Play

• Attractive yields in mortgage-backed and housing-related securities.
• Structural inefficiencies create value in MBS and ABS.