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.
The disappearing first-time homebuyer
What happens when an entire generation gets priced out of homeownership?
Eric Hathaway, Portfolio Manager on the BlueBay U.S. Fixed Income team, breaks down the structural shifts reshaping the U.S. housing market.
📊 First-time homebuyers are vanishing from the market at an unprecedented pace, with the median buyer age climbing dramatically
⚠️ Rising mortgage costs continue to push homeownership further out of reach for prospective buyers
💡 Embedded prepayment risk in agency mortgages makes directionality the real challenge for investors
The housing market is sending si...
The AI fixed income selloff nobody saw coming
Is AI a trap for bond investors - or a buying opportunity in disguise?
Andrzej Skiba, Head of U.S. Fixed Income on the BlueBay U.S. Fixed Income team, breaks down what's happening in AI-related fixed income and why it matters.
Heavy issuance and leveraged investor capitulation have reshaped sentiment across AI-related creditThe supply-demand imbalance has created a buyer's market for new deals coming to marketPosition sizing and patience are key when navigating this volatile spaceWith market sentiment toward AI credit at its worst, the dislocation is reshaping how active investors approach...
Competition for capital is back
What if the real opportunity in fixed income isn't just higher yields, it's who holds the leverage?
Anne Greenwood, Institutional Portfolio Manager on the BlueBay U.S. Fixed Income team, breaks down why growing global demand for capital is shifting power toward bondholders.
Governments, companies, and AI infrastructure are all competing for the same capitalWhen financing needs outpace investor appetite, borrowers offer greater compensation to attract itA wide spread alone doesn't make a bond a good investment—disciplined credit selection mattersAnne explains why selectivity on issuer, structure, and price matters more than ever wh...
When rising yields stop being credit's friend
What happens when the technical that usually supports credit starts working against it?
Ben Romeo, Senior Trader on the BlueBay U.S. Fixed Income team, unpacks the shift.
Rate volatility and inflation concerns are reshaping the buyer baseIssuers are pulling back from the long end, redirecting demand to the secondary marketWider concessions on new issues are giving investors more attractive entry levelsFrench sovereign risk has spilled from Europe into US creditIt's a setup worth paying attention to, and one where fundamentals still hold up.
Rising yields just rewrote the bond playbook
What if rising bond yields are actually an opportunity in disguise?
Neil Sun, Portfolio Manager on the BlueBay U.S. Fixed Income team breaks down what's driving the rate move and how investors should position.
Higher starting yields provide a stronger income foundationThe investment case doesn't require a sharp fall in interest ratesOpportunities are uneven across the bond marketThe recent rise in bond yields has reshaped the income landscape for fixed income investors. Robust growth, higher energy prices, and uncertainty in the Middle East have all contributed to the shift in rates.
When yield isn't enough
A Federal Reserve hike lifts yields, but attractive income alone does not mean investors are being paid for the credit risk they take.
Higher yields strengthen the foundation for income, but an attractive yield alone doesn't mean you're being paid for credit risk—both must be assessed together.Curve positioning matters: short-term yields may rise with policy rates, while persistent deficits and capital competition could keep long-term borrowing costs elevated even after the Fed eases.Financial strength is a competitive moat—companies with durable cash flows and manageable debt can keep investing when weaker competitors face financing constraints.Inflation corners the Fed
Stubborn inflation has the Fed cornered while AI's biggest leaders call to slow down, two forces reshaping the outlook investors face right now.
August inflation ran hot, pushing the market to price a roughly 90% chance of a September rate hike.The Trump administration's push for rate cuts leaves Fed Chair Warsh caught between stubborn inflation and political pressure to ease policy.Leaders of the three largest AI companies jointly called to slow development, warning AI is advancing faster than humans can monitor or control it.The Fed's no-win moment
What happens when the Fed runs out of good options?
That's the question hanging over markets after a hawkish Jackson Hole. This week, Tim Leary, Senior Portfolio Manager on the BlueBay U.S. Fixed Income team, unpacks what Chair Warsh's stance means for rates and risk.
AI adoption and capex spend remain key drivers of US growthHigher-for-longer rates shape the market backdropTim explores the credit landscape heading into SeptemberFrom US-Canada trade tensions to escalating geopolitical risk, Tim walks through the forces that defined the week and what they mean for credit.
The Treasury's yield problem it can't buy its way out of
Can the Treasury buy its way out of a yield problem?
Andrzej Skiba, Head of U.S. Fixed Income on the BlueBay U.S. Fixed Income team, breaks down what's really driving long Treasury yields—and why short-term fixes fall short.
Treasury buybacks briefly eased long yields before markets grew skepticalThe credible solution is deficit reduction, but political appetite for spending cuts looks limited Treasury and Fed policy are pulling in opposite directions, putting the Fed in a tricky spotWith Labor Day approaching, investors are sifting through incoming economic data and policy statements fo...
Where did all the junk go?
Where did the riskiest borrowers in credit actually go?
Anne Greenwood, Institutional Portfolio Manager on the BlueBay U.S. Fixed Income team, unpacks how credit risk is migrating—and why the high yield label no longer tells the whole story.
The high yield market has grown higher in quality, yet risk hasn't disappeared—it's moved. Much of it has migrated into leveraged loans and private credit over the past decade.The AI and data center buildout is bringing stronger balance sheets and new backstops into parts of high yield.When the market beneath the inde...
When a falling unemployment rate is bad news
What happens when the unemployment rate falls even as jobs disappear?
Mindy Gudmundson, Institutional Portfolio Manager on RBC GAM’s BlueBay U.S. Fixed Income team, unpacks a week of mixed market signals and what they reveal about the labor market beneath the headlines.
Job losses concentrated in consumer-facing sectors hint at a cooling labor marketA falling unemployment rate reflects workers leaving the workforce, not underlying strengthThe Fed's new chair is letting data, not commentary, steer policyIt's a week where the numbers told two very different stories, and the gap between them is wh...
When the bond market does the Fed's job
What happens when a divided Fed meets a bond market that's doing its own thing?
Laurie Mount, Portfolio Manager with RBC BlueBay's US Fixed Income team, breaks down the latest Federal Open Market Committee decision and what it means for your cash strategy.
A split committee with growing dissent among voting membersThe long end of the Treasury curve is telling a very different storyWhy staying liquid matters more than ever right nowWith conflicting signals from the Fed and geopolitical tensions adding pressure, staying nimble has become the defining move for cash investors today.<...
The AI build quietly rewriting credit markets
What happens when the race to build AI infrastructure meets the realities of credit markets?
Andrzej Skiba, Head of BlueBay U.S. Fixed Income at RBC GAM, breaks it down in this week's episode.
The AI buildout is reshaping how credit markets work.Debt issuance is climbing as companies finance the expansion.In-depth credit underwriting is what separates the strongest opportunities from the rest.When capital needs surge and equity issuance doesn't keep pace, debt markets carry the load-and that's exactly what's playing out right now. It's a moment that rewards careful, selective thinking.<...
The ABS market's record year has a catch
Record asset-backed securities (ABS) issuance. Spreads at year-to-date tights. But underneath, a bifurcated consumer is quietly narrowing the margin for error.
Teri Savage, Senior Trader on RBC GAM's BlueBay U.S. Fixed Income team, breaks down what's driving the ABS market's record pace, and why security selection has never mattered more.
ABS gross issuance is on pace for a record year, fueled by funding costs, diversification needs, consumer debt growth, and new sectors entering the market - yet spreads now sit at year-to-date tights across most subsectors.The consumer is holding up overall, but the picture...The credit upgrade nobody's pricing in
Tight spreads don't tell the whole story. The most compelling opportunities in US credit right now may be hiding in plain sight.
Anne Greenwood, Institutional Portfolio Manager on RBC GAM's BlueBay U.S. Fixed Income team, breaks down why the U.S. high yield market's quiet quality transformation is creating real opportunity for active managers - just as the AI trade begins to test investor appetite.
The AI tailwind in corporate bonds may be waning, and that changes the question investors need to be asking.BB-rated bonds now make up roughly half the US high yield...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...