The Weekly Fix
Today’s markets move fast. To keep you up to speed each week, Andrzej Skiba, CFA, Head of BlueBay U.S. Fixed Income at RBC Global Asset Management, and members of his investment team will deliver forward looking market commentary and insights into what’s driving fixed income markets over the coming week.
Rates may have peaked. AI's credit boom is just getting started.
Fed hikes may be overpriced, but yields stay supported by AI-driven growth. IG carry remains strong as record supply tests spreads.
The Treasury curve is expected to steepen in the second half of 2026: front-end yields may ease as oil-driven inflation pressure subsides and markets have potentially priced in too many Fed hikes under Chair Warsh's data-dependent regime, while robust AI-related investment and productivity-driven growth should keep yields stable to slightly higher at the 10-year and beyond.Investment grade credit spreads remain tight — index OAS at 74 basis points with a yield-to-worst of 5.22% — yet strong company fundamentals and yield-based demand have...The rate cut era is over
The Federal Reserve's pivot under new leadership is reshaping the fixed income landscape, and investors need to be ready.
Laurie Mount, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down what changed at the Fed's latest meeting and how investors should think about navigating this shift.
Warsh's first meeting as Fed chair delivered a hawkish surprise, with officials now projecting higher rates through 2027 and markets pricing in a rate hike as soon as September.The Fed pulled back on guidance and moved to discretionary bond purchases, creating less certainty about future moves...The AI job shock nobody’s talking about
The Fed's dual mandate faces unique challenges as artificial intelligence (AI) adoption creates new uncertainty around employment and rate trajectory.
Tim Leary, Senior Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how AI-driven economic transformation is reshaping the outlook for rates and credit markets.
Strong fundamentals support elevated rates - US gross domestic product (GDP) growth fueled by AI capex, low unemployment, solid corporate earnings, and consumer cash balances higher than pre-COVID levels across all income bands (even after adjusting for inflation).AI adoption uncertainty is the critical unknown - The Fed's...When AI becomes an infrastructure debt story
Capital formation replaces innovation as AI's next frontier: a new $85B raise and $1.5 trillion financing gap signal that hyperscaler balance sheets alone cannot fund the infrastructure buildout, forcing debt into utilities, private credit, and securitized markets.
Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how AI is transitioning from a technology story to a capital markets story, and why this shift matters for fixed income investors navigating the next phase of infrastructure financing.
AI's capital requirements now exceed what even the most profitable tech companies can self-fund, forcing a...The mortgage market’s quiet revolution
Built for this moment: Mortgage-backed securities are earning their place in fixed-income portfolios amidst an uncertain rate environment.
Teri Savage, Senior Trader on RBC GAM's BlueBay U.S. Fixed Income team, unpacks how securitized sectors are navigating sticky inflation and shifting Fed expectations.
Agency mortgages continue to act as a vital defensive anchor for portfolios during periods of broader macro uncertainty. The upward move in 30-year mortgage rates reflects a market transitioning to a higher-for-longer narrative regarding monetary policy. With contained net supply and stable prepayments, mortgage spreads present a highly compelling alternative to corporate credit.<...Stocks up, bonds down, and the Fed's not moving
Prolonged Middle East tensions drive aggressive bond selloffs across global markets, but strong corporate earnings and elevated yields keep high yield resilient amid broader fixed income volatility.
Andrzej Skiba, Head of BlueBay U.S. Fixed Income, explores how geopolitical fatigue is reshaping market dynamics, the widening Fed-ECB policy split, and why high yield continues to outperform amid bond market turbulence.
Geopolitical standoff in the Middle East is wearing thin on markets, driving aggressive bond selloffs as inflation fears mount despite underlying US economic resilience.The Fed-ECB monetary policy divide is widening, with Europe likely facing inevitable...AI concentration risk: don’t get over hype-scaled
The rapid AI infrastructure buildout draws capital from bonds, banks, and utilities – creating potential for concentration risk exposure.
Neil Sun, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down how Artificial Intelligence (AI) infrastructure funding is reverberating throughout public and private credit markets.
Hyperscalers are tapping public bonds, private infrastructure capital, and bank construction loans simultaneously—turning what looks like diversified exposure into overlapping bets on the same AI buildout theme.Banks and utilities are ramping up debt issuance, as utilities fund rising power demands and banks manage expanding balance sheets, compounding mark...Unprecedented Fed discord signals uncertain road ahead
Historic Fed discord meets Middle East uncertainty: The most dissenting votes since 1992 expose deep divisions as geopolitical risks and energy prices complicate the path forward for U.S. monetary policy.
Laurie Mount, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down last week's Fed meeting where rates held steady, but unprecedented internal disagreement and Middle East tensions introduced new market volatility.
Fed members showed record division on policy direction—the first time since 1992 the committee has revealed such internal disagreement, with markets reacting swiftly to the unexpected discord.Middle East conflict now of...Income without illusion: navigating late-cycle credit markets
A fragile equilibrium in fixed income: high yields persist despite tight conditions, creating potential opportunities for disciplined credit selection.
Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how elevated yields and tight spreads create a deceptively simple market environment that may reward active security selection and quality upgrades.
Attractive yields meet tight conditions: credit markets currently offer equity-like income levels, but the cushion against market volatility is thinner than historical norms suggest.Selectivity becomes essential in late-cycle markets. With real differences emerging between strong and weak performers, choosing the...Patience required: navigating US fixed income's inflation peak
Current energy shocks collide with restrictive monetary policy, creating a different challenge for fixed income investors than 2022.
Mindy Gudmundson, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how today’s potential inflation shock differs from a few years ago, and why timing may matter for bond investors positioning ahead of a perceived peak.
Today's energy shock hits an economy already operating under tight monetary conditions, creating stagflation risks that contrast sharply with 2022's zero-rate environment. Headline CPI heading toward 4% while growth slows materially below early-year expectations, with consumer sentiment reaching all-time lo...Quality carry over market timing
Markets bounced back, but some investors still aren't buying it. Despite the recovery in equities, positioning remains cautious as high yield fundamentals hold firm.
Tim Leary, Senior Portfolio Manager on RBC GAM's BlueBay Leveraged Finance team, discusses the evolving dynamics between quality carry and market timing in today's environment.
The S&P recovered to flat for the year, yet investors seem to remain split between thinking they missed the rally and expecting another drop.High yield tech companies show stronger balance sheets and more diverse investor interest than their private credit counterparts, despite concerns around AI...Between conflict and compromise: finding value amid Middle East volatility
Quality over risk in volatile markets: Middle East tensions are influencing bond investors toward safer U.S. positions while energy prices create challenges across global economies.
Andrzej Skiba, Head of U.S. Fixed Income on RBC GAM's BlueBay U.S. Fixed Income team, breaks down how geopolitical events are shaping bond strategies and why regional economic exposures differ significantly.
Markets have recovered on hopes for diplomatic progress, though uncertainty around Iran negotiations remains given strategic considerations over key shipping routes.So far, U.S. economic exposure appears more limited due to energy independence, while Europe and...EA's record-breaking buyout rewrites LBO playbook
A new $55B deal rewrites the leveraged buyout playbook with equity-heavy financing.
Jeff Jablons, Senior High Yield Analyst covering telecom, cable, satellite, and technology sectors on RBC GAM's BlueBay U.S. Fixed Income team, examines how a video game company’s take-private deal shatters conventional leveraged buyout dynamics.
The capital structure flips convention with $36 billion in equity versus just $18 billion in debt, reversing the typical 60-75% debt ratio seen in traditional LBOs.Saudi Arabia's Public Investment Fund anchors this unprecedented deal with a $30+ billion equity commitment, demonstrating the power of sovereign-scale capital backing.Strong investor demand ac...Three paths back to rate cuts
Cut expectations evaporate: Federal Reserve easing bets collapsed after March meeting as geopolitical risks and inflation concerns pushed rate hike probabilities above cut scenarios for the first time since last month's two-cut consensus.
Eric Hathaway, Portfolio Manager on the BlueBay U.S. Fixed Income team, explores three catalysts that could revive rate cut expectations despite current hawkish sentiment.
Labor market weakness deepens beneath surface as February nonfarm payrolls fell 92,000 jobs with December revised from +48,000 to -17,000, suggesting unemployment could drift higher and force Fed reconsideration.AI-driven displacement moves from theory to reality as major institutions plan...Why private credit's software problem is high yield's opportunity
Private credit's software problem creates a potential opportunity for high yield as exposure gaps reveal structural vulnerabilities in direct lending portfolios.
Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, analyzes how AI-driven repricing may redirect capital flows across credit markets.
Widespread credit repricing pushes spreads to widest levels since last year, driven primarily by software sector concerns, while energy tightens on geopolitical supply pressures.Direct lending holds over 30% software exposure compared to less than 4% in high yield, concentrating AI displacement risk where liquidity is most constrained and underwriting scrutiny intensifying...One person’s volatility is another’s opportunity
Corporate credit faces volatility as private credit stress rises, AI divides borrowers, and IG primary strength masks widening dispersion.
Neil Sun, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, examines how stagflation-style stress and cross-asset volatility are reshaping the credit landscape and potentially creating selective opportunities.
Private credit deterioration is accelerating as BDCs report rising nonaccruals and questionable loan valuations while higher rates expose overleveraged structures in this illiquid corner of the market.AI infrastructure spending creates a credit divide where mega-cap tech maintains robust capital access for data centers and long-term investments...Underlying strength shields credit markets from geopolitical shocks
Positioning pays off: Conservative allocations and incoming cash flows shield high yield investors from geopolitical volatility that rattled broader markets.
Peter Keenan, Senior Credit Trader on RBC GAM's BlueBay U.S. Fixed Income team, examines how cash flows and positioning created an unexpected buffer against Middle East tensions.
High yield bonds showed resilience despite heightened Middle East tensions and surging oil prices on supply concerns from potential Strait of Hormuz disruptions.Conservative positioning and substantial incoming cash from coupons, calls, and maturities created buying pressure in a market where geopolitical uncertainty sidelined new corporate issuance.Treasury...Markets navigate AI spending boom while inflation holds below target
RBC’s BlueBay Fixed Income team discusses how US markets have shown resilience with contained inflation, though heavy tech sector debt issuance from AI investment creates credit market pressure while raising questions about potential future inflationary risks.
January CPI rose just 0.2% monthly and 2.4% annually, below consensus, keeping two 2026 rate cuts priced in.Technology sector's elevated 2026 capex projections are generating significant new supply in investment grade credit markets, creating technical spread pressure while high yield remains well positioned.The AI investment cycle presents dual risks—whether monetization will justify near-term spending and whether competition for resources could generate inflationary pres...New hawks on the FOMC, but old uncertainties remain
Trump nominates Warsh for Fed chair as new governors potentially reshape this year’s rate outlook.
Laurie Mount, Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down how FOMC leadership changes and political headwinds are shaping the Fed's uncertain 2026 policy path.
Rates held at 3.50–3.75% as four hawkish members joined, though dissents from Governors Miran and Waller favored easing.Warsh's Fed chair nomination faces Senate opposition pending a DOJ investigation into Powell.Money market balances near $8 trillion as investors appear to favor short-duration positions.Steeper curves, tighter spreads: a credit market inflection
Will tighter spreads hold as supply floods the market?
Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, discusses the Fed's steady approach and how heavy corporate issuance is shaping the credit landscape.
The Fed is expected to hold rates this week, with the potential for up to 3 cuts later in 2026. Corporate fundamentals remain solid, though shorter-dated bonds may offer advantages as front-end rates potentially decline.Heavy corporate borrowing for AI spending, tech earnings results, and geopolitical tensions could impact spreads and bring volatility in Q1.Decoding U.S. Banks' Robust Q4 Performance and 2026 Outlook
Signals of strength? U.S. banks’ Q4 earnings highlight steady fundamentals and confidence heading into 2026.
John Guarnera, Senior Corporate Analyst on RBC GAM's BlueBay U.S. Fixed Income team, analyzes the latest bank results and their implications for both economic fundamentals and sector positioning.
Investment banking surged—M&A advisory revenues climbed over 40% in some banks—while equity trading gains point to optimism in capital markets.Asset quality remains stable across lending verticals, dispelling concerns around fraud events seen earlier in the year.Loan growth in commercial sectors and steady deposits reinforce banks' sector momentum and abilit...Tight spreads, tighter credit: the year ahead
Tight spreads, tighter credit: What’s next for high-yield?
Tim Leary, Senior Portfolio Manager on RBC GAM’s BlueBay U.S. Fixed Income team, shares insights on high-yield market dynamics and potential credit risks in the year ahead.
Spreads across high-yield markets remain tight, supported by strong investor interest and steady issuance.High-yield bond issuance can align with positive returns, underscoring resilience in market performance.Trump’s proposal to cap credit card fees at 10% could hurt borrowers, with subprime consumers likely facing reduced access to credit.High returns, heavy supply: walking 2026’s fixed income tightrope
A year of high returns or high risks? Fixed income markets look to navigate 2026’s key challenges.
In the latest edition of The Weekly Fix, Andrzej Skiba, BlueBay Head of U.S. Fixed Income at RBC GAM, explores a strong fixed income outlook for the new year, driven by carry income and economic momentum. However, the year also brings critical questions about monetary policy, the AI-driven capital wave, and heavy credit issuance.
High single-digit returns may be achievable, supported by carry income and projected economic growth.Inflation remains above target, and potential rate cuts could hinge on...Cash tsunami: $8T in money markets as investors play the waiting game
Amid high-short term rates and diverging Fed opinions, investors have turned to money market funds, waiting for clarity on the economic outlook.
In this week’s episode, Laurie Mount, Portfolio Manager with RBC’s BlueBay U.S. Fixed Income team, highlights key trends shaping cash management strategies:
The Fed lowered the fed funds rate by 25 basis points to 3.50–3.75%, with varied perspectives on the pace of rate adjustments.Money market assets surpassed $8 trillion, fueled by elevated short-term rates and cautious investor sentiment.Looking ahead, 2026 may bring key labor market developments critical to inflation, growth, and further potential Fed cu...2026 vision: rate cuts, tight spreads, and AI’s growing pains
Is the AI boom testing market limits, or uncovering new opportunities in fixed income for 2026?
Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, explores the outlook for U.S. fixed income markets in 2026, focusing on Federal Reserve policy, the credit cycle, and the impact of surging AI-driven debt issuance.
We expect a hawkish rate cut to close 2025, signaling a dovish path ahead, with more cuts expected in 2026 as U.S. growth reaccelerates.Despite tight spreads, stronger credit quality and rising volatility create opportunities for idiosyncratic spread compression trades.Record AI-related...Data drought: navigating the economic fog
Mindy Gudmundson, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, explores how the longest-ever government shutdown has led to a data backlog, intensifying bond market volatility and uncertainty surrounding December’s FOMC rate decision.
The 43-day government shutdown delayed critical economic data releases, distorting analysis and increasing market volatility as investors navigate incomplete information.U.S. Treasury yields experienced sharp movements, closing above 4.05%, as markets priced in a potential Federal Reserve rate cut in December.Investor tensions remain elevated amid rate-cut speculation, stock-market instability, and persistent macroeconomic ambiguity, driving interest in fixed-income securities.High yield bonds: Generating income, navigating volatility
With more volatility potentially on the horizon, we believe US High Yield bonds can provide a ‘port in the storm’.
Tim Leary, Senior Portfolio Manager on RBC GAM’s BlueBay U.S. Fixed Income team, explains how US High Yield (HY) bonds have continued to stand out as a reliable option for generating income while managing rate risk during periods of market uncertainty.
The US HY index currently provides an Option Adjusted Spread (OAS) of 307 bps with a duration of just over 3 years, widening 14 bps this year despite a 7% return.Compared to US Investment Grade (IG) corpor...Tech bros vs finance bros: big tech’s mega bond issuance
Big Tech is reshaping the bond market. Are investors ready for Silicon Valley’s mega issuances?
Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, discusses a tectonic shift in Silicon Valley’s funding strategy. Once cash-rich with pristine balance sheets, major tech companies are now tapping the investment-grade bond market to finance their soaring AI-related capital expenditures.
Silicon Valley's debt strategy shift, including $75bn in recent issuances, shows tech giants are prioritizing debt over equity due to tight spreads and tax advantages.Multi-tranche deals across maturities, from 5 to 50 years, are catering to robu...Powell's caution: a foggy road ahead for interest rates
Divided Fed, uncertain future: Powell’s cautious tone raises questions about policy shifts ahead.
Laurie Mount, Portfolio Manager with RBC GAM’s BlueBay US Fixed Income team, highlights the Federal Reserve's recent rate cut and its impact on cash strategies amid ongoing economic uncertainties.
The Fed lowered the fed funds rate by 25 basis points to 3.75–4.00%, while signaling caution regarding December cuts due to labor market risks and committee divisions over inflation concerns.Fed Chair Powell warned against assuming another rate cut soon, citing a lack of data due to the government shutdown, which has already led market...Systemic risks versus idiosyncratic events
Systemic risk, or just unusual events? Recent market turbulence leaves some questions about how long high valuations and tight spreads will continue.
Anne Greenwood, Institutional Portfolio Manager on RBC BlueBay’s US Fixed Income team, discusses the current market landscape and opportunities for active managers.
Equities at record highs and tight credit spreads indicate market resilience, despite recent jitters.Lower-quality high-yield bonds and leverage loans require caution due to deteriorating credit metrics and increased default rates.Active managers may be able to capitalize on volatility by providing liquidity and generating strong risk-adjusted returns in fundamentally stable co...Bank resilience amid market jitters
Credit cycle deterioration? Not so fast- new earnings reports from the banking sector ease fears of financially stretched consumers and companies.
John Guarnera, Senior Corporate Analyst on RBC BlueBay’s US Fixed Income Team, explores the latest data from US banks and an outlook on recent credit market developments.
Third-quarter earnings from major US banks revealed stable asset quality and improved credit metrics.Banks' balance sheets remain robust, with high capital levels and strong liquidity, supporting their ability to manage potential risks.Consumer and commercial credit trends show improvement, with delinquency metrics stabilizing across prime and su...US High Yield: attractive yields, selective opportunities
US High Yield continues to perform well this quarter- but geopolitical volatility demands strategic positioning.
In this edition of #TheWeeklyFix, Charlie Whinery, Portfolio Manager on RBC BlueBay’s US Fixed Income Team, breaks down Q3's strong performance and how his team is navigating current market dynamics.
US HY delivered solid 2.4% returns in Q3 with robust $140B issuance, low leverage levels, and healthy interest coverage ratios well above historical norms. Geopolitical risks create uncertainty - Trump's tariff threats on Chinese goods sparked volatility, making front-end positioning a potential strategic advantage.Adapting to market dynamics in fixed income strategies
Amid a shifting market landscape, fixed income strategies are evolving to uncover
value in key sectors.
Andrzej Skiba, Head of BlueBay U.S. Fixed Income at RBC GAM, shares how his team is navigating today’s market dynamics while seeking to position for strong returns in 2026.
Favoring curve steepeners for U.S. interest rate exposure, with resilience expected unless inflation drops significantly or fiscal deficits shrink unexpectedly.Generic corporate credit spreads remain unappealing, prompting a focus on idiosyncratic opportunities in sectors like California utilities, chip manufacturing, and US housing.We anticipate high single-digit returns in...Economic pulse: GDP growth, labor market stability, and government turbulence
New GDP data shows economic growth, but labor market and political risks keep markets on edge.
Mindy Gudmundson, Institutional Portfolio Manager with RBC BlueBay’s US Fixed Income team, breaks down the latest economic data and key developments shaping markets.
Second-quarter GDP revised to 3.8%, driven by strong consumer spending, while jobless claims fell, easing labor market concerns.This week’s labor market data will be critical in shaping expectations for Federal Reserve rate cuts.A potential government shutdown could delay key economic data releases but is unlikely to significantly impact the broader economy.Diverging views on monetary policy: a closer look at the Fed's path forward
The Fed’s rate cut is in, just as the market expected – what’s next for the future of monetary policy?
Laurie Mount, Portfolio Manager with RBC BlueBay’s U.S. Fixed Income team, unpacks the Federal Reserve’s latest rate cut, economic projections, and what it all means for investors.
The Fed cut rates by 25 basis points, lowering the target range to 4.00–4.25%, with projections showing stronger growth, higher inflation, and lower unemployment through 2026–27.Diverging views among FOMC members reveal uncertainty, with projections ranging from no more cuts to a 100-basis point reduction by year-end 2025.Chair Powell describ...The intersection of Fed policy and housing affordability
Can Fed policy ease the housing affordability crisis?
Teri Savage, Senior Mortgage Trader with RBC BlueBay’s Fixed Income team, explores the pressures on the U.S. housing market and the potential impact of upcoming policy changes.
Home prices continue to outpace income growth, while 30-year mortgage rates remain stubbornly above 6%, pushing affordability to record lows.The Federal Reserve is expected to cut the Fed funds rate, which could drive down Treasury yields and, in turn, lower mortgage rates to help ease affordability pressures.Mortgage investors should remain flexible and closely monitor policy developments, as the ad...The Fix Is In. Fixed over floating now that rate cuts are all but certain
Senior portfolio manager Tim Leary discusses how weaker job growth and strong bond market activity, coupled with tight spreads, support expectations for a September rate cut and continued favorable conditions for fixed-income markets.
Weaker job data and key events like Jackson Hole and August payrolls pave the way for a September rate cut. Strong technicals in the US bond markets persist, with significant issuance and demand driving tighter spreads, lower yields, and favorable pricing. The S&P showed minor volatility, while the Russell 2000 demonstrated stronger risk sentiment, reflecting optimism in HY markets due to overlapping names. This leads...Back to school, back to supply: corporate credit spreads at historic lows, what’s next?
Corporate credit spreads are at historic lows – will September’s bond supply shake up the market?
Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team, analyzes the tightest corporate bond spreads in decades and highlights potential opportunities.
Investment-grade corporate bond spreads are near 80 bps over Treasuries, driven by strong demand despite slim risk compensation.With $130-150bn in new corporate issuance expected, the market’s ability to absorb supply without widening spreads will be tested.Long-term conditions support a bullish credit stance, but near-term widening may create selective re-entry opportunities for investors.Strategic insights: Fed signals, credit markets, and market implications
Fed Chair Powell excited investors last Friday with hints of a potential September rate cut. What’s next for credit markets?
Anne Greenwood, Institutional Portfolio Manager with RBC BlueBay’s Fixed Income team, breaks down the market reaction to the Jackson Hole Symposium.
Fed Chair Jerome Powell signaled the potential for a September rate cut, citing balanced labor markets and easing inflation risks.U.S. risk assets remain well supported, but heightened uncertainty and a wide range of outcomes suggest volatility is likely to persist.It is important to maintain a cautious approach to credit risk and...Fed policy in focus: inflation trends, rate cuts, and market expectations
All eyes are on Jackson Hole this week as investors digest recent economic data and look ahead to the Fed’s next moves.
Mindy Gudmundson, Institutional Portfolio Manager with RBC BlueBay’s U.S. Fixed Income team, breaks down the latest inflation data, rate cut expectations, and what to watch ahead of Chair Powell’s Jackson Hole speech.
Headline inflation dipped to 2.7%, nearing the Fed’s target, but core CPI rose to 3.1%, keeping inflation risks in focus.Markets expect a 25 bps cut in September, with more cuts likely in the months ahead.Chair Powell’s speech in Jackson...