Could 2026 be a favorable environment for fixed income strategies?
The emerging scenario is one of solid but not overheated global growth. Although inflation risks have returned due to the conflict, core inflation dynamics continue to show a contained trend; therefore, central banks are unlikely to adopt restrictive measures to the extent predicted by the markets. In a resilient and stable growth environment, risky assets can continue to benefit from favorable conditions. For fixed income, this environment makes a selective approach focused on generating quality income particularly attractive.
What are the main risks investors should consider today?
The start of the year was marked by increased geopolitical tensions and doubts about the Federal Reserve's independence. While not compromising the positive risk environment, these factors are fueling interest in tangible and alternative assets, aided by declining confidence in traditional institutions. At the same time, the artificial intelligence revolution is transforming entire industrial sectors, stimulating demand for raw materials and specialized equipment and creating new long-term investment opportunities. Finally, the conflict has fueled fears of stagflation, although we believe the incentives are such that it will be relatively short-lived and unlikely to push central banks to adopt aggressively restrictive monetary policy that would weigh on growth.
In this context, what role can bonds play in portfolios?
In 2026, investment strategies should capitalize on the favorable growth environment while limiting exposure to political risks. A preference for bonds, particularly those issued by companies with solid balance sheets, therefore appears appropriate. Exposure to the high-yield segment via CDS indices may also be attractive in a world characterized by high nominal growth. Instruments such as AT1s, BB bonds, and CLOs can offer attractive returns while maintaining a relatively low default risk.
Besides credit, what other asset classes deserve attention?
Sustained demand for precious and industrial metals reinforces the positive outlook for these assets, both as safe-haven assets and as beneficiaries of technological transition. Some emerging market currencies with attractive yields also offer upside potential. Furthermore, technology-linked convertibles represent an effective way to participate in the potential of artificial intelligence while maintaining downside protection. The recent recovery in small-cap earnings, up 8% year-over-year, further expands opportunities in this segment.
Looking back on your professional experience, how did you become specialized in global fixed income dynamics?
I have approximately fifteen years of experience in the fixed income markets, working on strategies that integrate macroeconomic, currency, and cross-asset variables. Before joining UBP in 2015, I was a macro currency strategist at Principal Global Investors in London and, prior to that, a cross-asset strategist for emerging markets at the Royal Bank of Scotland. This experience has allowed me to develop an integrated view of credit, rates, currencies, and macroeconomic cycles, which today contributes to the definition of top-down asset allocation in global portfolios.
So what is the key message for investors in 2026?
With all-in yields increasingly attractive, income generation is once again a central element in portfolio construction. Quality bonds, complemented by more flexible instruments such as convertible bonds and select credit, can offer an effective balance between return and risk management. Building balanced and diversified portfolios, both geographically and by sector, will be crucial to navigating a world that remains favorable, but not without complexity.
