Higher yields mean income once again provides a meaningful starting point for bond returns, as well as a greater cushion against further increases in yields.
Fixed income: higher yields transform the return outlook
Global economy: resilience faces a tougher test
Inflation: volatility may be here to stay
Credit: competing for investors' capital
AI-related investment and higher defence spending should continue to support growth, but tighter financial conditions may increasingly weigh on more interest-rate-sensitive parts of the economy.
Inflation could moderate during 2027, but geopolitical fragmentation, vulnerable supply chains and growing competition for energy and commodities may keep inflation more volatile than before the pandemic.
Higher term premia have restored value in parts of global government bond markets, but large deficits and borrowing requirements mean fiscal credibility could become an increasingly important differentiator.
Deep dive into the full 2027 outlook
Currencies: relative value beneath the calm
The relationship between equities and bonds has become less dependable, strengthening the case for alternative sources of diversification, including options, commodities and currencies.
Multi-asset: looking beyond traditional diversification
Global rates: fiscal credibility comes into focus
Currency markets have been unusually stable, but growing divergence in monetary policy, fiscal credibility and growth could create more relative-value opportunities in 2027.
Government borrowing and AI-related corporate issuance are increasing the supply of bonds competing for investors' capital, potentially creating greater relative-value opportunities for active investors.
