MacKay Shields Fixed Income Quarterly Outlooks – 1Q26

In a world of diverging growth paths and recalibrated rate regimes, global fixed income allocators face a landscape rich with dispersion—and opportunity. From EM recovery and convertibles’ convexity to rate resilience and evolving credit cycles, we explore how nimble positioning and cross-sector flexibility can help investors harness durable income and downside defense.

Featuring expert insights on:

• Macroeconomic Outlook – “We believe the US economy will regain momentum in 2026, supported by fiscal easing and fading of the trade policy shock. The lagged effects of this year’s monetary easing and accommodative financial conditions contribute to our constructive outlook."

• Multi-Sector Outlook - "Carry dominates early 2026 as higher-for-longer rates persist. MacKay Shields holds neutral duration with emphasis on intermediate maturities. Agency MBS offers compelling defensive income, while credit positioning favors quality issuers and selective opportunities in securitized and EM local markets."

• Emerging Markets Outlook – "EM debt starts in 2026 supported by Fed easing, resilient commodities, and a weaker dollar. Opportunities remain in reform-focused sovereigns and improving credit stories. Local markets continue to lead as stronger FX, lower inflation and easing cycles reinforce returns, with several high-yield markets still attractive."

• High Yield Outlook – “High yield continues to offer compelling income potential amid stable credit fundamentals and evolving issuance trends—from AI infrastructure to renewed M&A. Explore where we see opportunity in today’s recalibrated market."

• Convertibles Outlook – “Convertibles enter 2026 after strong, tech-driven gains that increased equity sensitivity. MacKay Shields is more selective, emphasizing fundamentals and valuation as issuance stays active. The team maintains tech-aligned exposure, favors healthcare, and remains underweight for utilities and financials."