Fixed Income Outlook 2026: Rate Cuts, Steeper Curves and Corporate Debt Opportunities

The year has begun with a global environment influenced by relevant geopolitical events and significant changes in currencies and commodities. In the fixed income sector, interest rates and associated macroeconomic indicators have been key drivers. During 2026, a stabilization of inflation and consumer prices is expected, while expectations of future interest rate cuts primarily point to a large-scale economic easing.

Fiscal deficits and government policies are key catalysts in the quantitative evolution of sovereign debt yield curves at different maturities, promoting developments in both defense and artificial intelligence. A marked trend towards a steepening of the yield curve is also identified, highlighting the role of government bonds as the main safe-haven asset against the current speculative volatility of gold.

Events such as the elections in Japan, the appointment of a new governor at the US Federal Reserve and rising deficits have significantly impacted long-term bond prices (10-30 years), triggering massive selloffs in US debt and similar gold transactions by governments in anticipation of increased debt issuance.

We expect that when the US adjusts its interest rates, the ECB and the BOE will follow a similar path, not necessarily due to an economic slowdown but rather to financing needs. Public debt will be more volatile than corporate debt, facilitating 60/40 strategies to capitalize on benchmark-to-primary market spreads, especially if rate cuts are likely.

For buy-and-hold strategies, we prioritize 4–5-year private debt issuances, given that attractive opportunities still exist in discounted investment-grade corporate debt in the short and medium term.

Report by Leticia Diez Glenday, our Senior Portfolio Manager @ Alcral AG I Global Macro