Policy divergence:
- US Federal Reserve (Fed):
Cut rates by 25 bps, continuing its easing cycle.
Slowing job creation and rising unemployment.
- Bank of England (BoE):
Cut rates by 25 bps (narrowly split vote).
Inflation still above target but expected to normalise sooner.
- European Central Bank (ECB):
Rates unchanged, policy considered “in a good place.”
GDP growth stronger; inflation close to target.
- Bank of Japan (BoJ):
Raised rates by 25 bps to 0.75%, signalling further exit from ultra-accommodative policy.
Yields rose in December:
- US 10-year: +15 bps to 4.17%
- Germany 10-year: +17 bps to 2.85%
- UK 10-year: +4 bps to 4.48%
- France 10-year: +15 bps to 3.56%
Outlook: Front-end yields provide carry; intermediate maturities balance risk/reward; long-duration bonds remain sensitive to issuance and term premium volatility.
Credit Markets
- Investment Grade: Stable fundamentals, tight spreads; returns increasingly driven by carry and duration.
- High Yield: Attractive carry, but limited margin for error, particularly for lower-quality issuers facing refinancing needs in 2026.
Other sections to read:
The below FSCA regulated companies, who conduct asset management and investment services, are owned by Orion Investment Managers (OIM). These subsidiary companies operate in a number of different jurisdictions, and each provides investment management and products to their clients. Orion Investment Managers, is, in turn, owned by Spirit Invest International, which owns a portfolio of companies in the investment sector...
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