MacKay Shields Fixed Income Quarterly Outlooks – 4Q25

In MacKay Shields’ latest outlooks, the investment teams highlight opportunity amid caution—strong recent performance in convertibles and high yield, resilience across emerging markets, and value in multi-sector credit. With elevated valuations and sticky inflation, disciplined, research-driven positioning remains essential.

Featuring expert insights on:

• Macroeconomic Outlook – “Market optimism may be running ahead of reality. We see a slower, shallower Fed cutting path than markets currently discount, as sticky core inflation and resilient growth argue for patience. While political and leadership shifts could shape expectations, we believe any dovish turn will be modest.”

• Global Fixed Income Outlook – “As spreads tighten and optimism runs high, disciplined positioning is essential. We’re emphasizing carry, quality, and diversification—favoring resilient A-rated issuers, selective high yield, and value in securitized and EM credit. With rate cuts on the horizon, we remain focused on balancing risk and reward across sectors while staying vigilant to both macro and idiosyncratic factors. Read our full Q4 2025 multi-sector outlook.”

• Emerging Markets Outlook – “Emerging Markets continue to present compelling opportunities amid global resilience. With supportive macro trends—Fed easing, stable commodities, and a softer dollar—EM fixed income remains well-positioned. Yet with tight valuations and diverging policy paths, selectivity and research-driven positioning are key to capturing the next leg of returns.”

• High Yield Outlook – “High yield credit continues its historic run, supported by strong fundamentals, renewed issuance, and steady demand. Yet with tight spreads and selective cracks emerging in leveraged markets, disciplined credit analysis remains essential.”

• Convertibles Outlook – “The U.S. convertible market posted strong year-to-date gains, supported by robust issuance and sector strength in AI and technology. With valuations elevated, we remain selective and focused on fundamentals.”