Navigating Shifting Currents — Fixed Income Outlook in 5 Charts

September 5, 2025 — As the labor market shows signs of softening and growth momentum fades, the economic outlook remains clouded with uncertainty. Leading indicators suggest upward pressure on unemployment, while markets anticipate a Fed easing cycle that could deepen if growth falters further. Against this backdrop, yields appear biased lower, reflecting elevated downside risks. Credit spreads remain tight, offering limited cushion against surprises, but declining rate volatility may support spread compression in sectors like MBS. Together, these dynamics shape a cautious yet opportunistic fixed income positioning strategy.