@BNP Paribas.
2025 was widely expected to be a good year for bonds. The US economy seemed to have found a floor, inflation looked to be contained, and interest rates had a long way to fall. The combination of high yields and capital appreciation from falling rates was, if a bit simplistic, a reason to be excited about the outlook for compelling total returns. But 2025 is looking increasingly like it will be anything but simple.
There are several non-consensus scenarios that are at least plausible in the coming year. In this article, we consider some of them and propose diversification strategies that could help improve risk-adjusted returns should that scenario unfold.
