Corporate Credit

T. Rowe Price has announced the launch of the T. Rowe Price Dynamic Emerging Markets Bond ETF (TDEM) on the Nasdaq today, the company said.

The Fed’s latest 25 basis point hike might represent a recalibration rather than tightening. Instead of focusing on the next hike, investors should watch broader financial conditions and the long-term trajectory for interest rates.

Fixed-income investors are being paid more to take risk than they have been in years, but not all opportunities are created equal. Higher yield levels, heightened volatility and growing differences across countries, sectors, industries and issuers are expanding the opportunity set. Dispersion is the raw material from which active returns are generated. Below are four ways investors can capitalize on it.

Midterm elections are increasingly taking over the headlines, and that includes coverage of markets. While inflation, rates, and geopolitics probably have more outright impact on portfolios, investors and market watchers still look to midterm elections as a major event.

AI could be a transformative force for the Fed’s policy framework. Elevated investment demand – now coupled with positive wealth effects that are necessitating tighter financial conditions – could eventually give way to a positive supply impact from higher productivity growth that could allow for easier financial conditions without inflationary implications.

Munis can fund local power, grid, water and wastewater infrastructure; most AI campus capital will be financed in non-municipal markets.​

Economic data from last week continued to paint a picture of a robust U.S. economy with an accelerating pace of growth. After a strong durable goods report showed business fixed investment continuing to rise on the back of ongoing AI data center buildouts, the Atlanta Fed’s GDP Now estimate for third-quarter real economic growth remained at an elevated 5 percent.

Yields have pushed higher with some points on the curve reaching yield levels not seen since the mid-2000s. While it is nearly impossible to pinpoint a specific catalyst for any move in the financial markets, below are a few of the factors that have helped push interest rates higher.

Given that the Federal Reserve raised interest rates earlier in September, inflation data that was already crucial has taken on a new meaning. These reports could now serve as a barometer for what is to come from the central bank.

Bond markets continue to adjust to a more hawkish policy environment following the Federal Reserve’s recent 25-basis-point rate hike.

AI-related borrowers have accounted for nearly a quarter of nonfinancial U.S. dollar (USD) supply year-to-date, yet spreads for non-AI issuers have not widened meaningfully. Instead, hyperscaler spreads have widened, suggesting the market is absorbing the AI supply shock at its source.

Retail investors buy corporate bond ETFs expecting steady coupons and ballast against stock market volatility. Traditionally, fixed-income portfolios were anchored by defensive issuers like banks, industrials and utilities.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

The financial markets are navigating a storm. The Treasury yield sell-off intensified this week, pushing the 10-year Treasury yield up to an intraday high of 5.20%, its highest level since 2007.

The S&P 500 has remained remarkably resilient in the face of mounting macro headwinds. Despite oil prices topping $100 per barrel, 10-year Treasury yields climbing above 5%, and a renewed shift toward tighter monetary policy, the index continues to hover near record levels.

Artificial intelligence (AI) leadership is no longer a developed-market monopoly. Emerging markets (EM) now have their own AI champions, and productivity gains may follow. For bond investors, we expect the implications to differ by country—driven by industry composition, capital intensity, digital infrastructure and speed to adoption.

This week, there are a few things that we need to pay attention to: the large move in interest rates and what it means (and more importantly, what it doesn’t mean!); and the constant barrage of doom and gloom on energy and AI. Let’s jump in.

Since ChatGPT was first released in 2022, the artificial intelligence (AI) trade has dominated US equity markets. Gains have been driven by three interrelated forces: enthusiasm for artificial intelligence, growing concentration in the largest technology companies and strong price momentum.

This year has presented no shortage of challenges for investors. Geopolitical conflict, trade tensions, rising energy prices, shifting interest rate expectations and an increasingly active political backdrop have each taken turns dominating the headlines. Yet despite these obstacles, the economy has continued to expand, corporate profits have marched higher and markets have climbed one wall of worry after another.

The rise in Treasury yields has prompted a familiar set of explanations. Some investors have pointed to government borrowing and persistent inflation, while others have focused on the possibility that artificial intelligence will lift economic growth and interest rates.

We know from recent history why this question feels so timely. Fixed income remains a foundational portfolio building block, offering low-correlated or uncorrelated diversification and downside risk mitigation. However, holding long-dated bonds in recent years has been notoriously painful.

The appeal of a portfolio of individual bonds for many investors are the known qualities that they can provide: a known stream of cash flow, a known redemption value, a known redemption date, and a known yield; all of which are locked in at the time of purchase.

Markets have dealt with serious whiplash from the Federal Reserve’s dramatic policy pivot this year. In just six months, the Fed funds futures market went from pricing in two rate cuts totaling 50 basis points to now pricing in two rate hikes in 2026.

Federal Reserve (Fed) chair Kevin Warsh has established his hawkish credentials. Franklin Templeton CIO, Sonal Desai sees scope for further yield curve steepening and a range of selective opportunities, based on capturing income and focusing on quality rather than counting on lower rates or tighter spreads.

A popular narrative for the rise in bond yields over the past few months is that the debt-funded AI capital expenditure cycle is crowding out the Treasury market. The crowding-out argument can appear compelling: AI companies are expected to continue to issue unprecedented amounts of debt at a time when Treasury supply remains elevated. Because both ultimately draw from the same pool of investor capital, yields must rise to clear the market.

According to the latest SPIVA U.S. Scorecard report, broader isn’t always better for active managers. Following a volatile start to the year, the S&P 500 rebounded sharply in the second quarter to gain 10% through June 30 thanks to robust corporate earnings.

We are never going to get rid of the FOMC for political and practical reasons. For those of us who would like to see the market set rates without an FOMC intervening, this is as good as it’s going to get.

The Federal Reserve (Fed) made something clear this week that markets had been reluctant to accept. Apparently, the easing cycle isn't paused, it's over for now.

Artificial intelligence is advancing at a stunning, and perhaps uncontrolled speed. Last week, Evan Hubinger, the Alignment Science Lead at the AI company Anthropic estimated a greater than 10% chance that AI could eliminate humanity within a decade. Jakub Pachocki, Chief Scientist at OpenAI, recently observed 'The core problem in AI research is that of alignment - getting the AI to ‘try to do the right thing’ by human standards…

Municipal bonds might still offer attractive tax-advantaged income and relatively stable credit quality for investors who understand the risks.

Stocks have recently hit new highs, supported by strong earnings growth, but the bond market is sending a more cautious signal.

When it comes to personal finance, conventional wisdom says the best way to live is debt-free. There are many important reasons why this is tried and true, but for high-net-worth individuals, lending can be an optimal way to access cash in the near term without sacrificing long-term gains on your assets.

Last December we published Riding the Wave: The Anatomy of Booms & Bubbles. In it, we argued that the AI spending boom would continue through 2026 without tipping into ‘bubble’ mania, and that the right posture was to stay overweight stocks while favoring US assets. Nine months on, we think that call has aged well.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

Demand for fixed income ETFs hit a historic high-water mark in September. Investors and advisors turned to fixed income ETFs at a record-breaking pace, driving 2026 net inflows of $446 billion past all-time levels with months to spare. The massive tide of capital arrives at a critical juncture.

Is the AI infrastructure buildout one big trade in credit? So far, the market seems to think so. Spread dispersion – differences in borrowing costs among issuers – across the financing chain remains limited despite sharp differences in underlying risk. This contrasts with equities, where performance has become increasingly differentiated.

Attractive yields and resilient credit conditions are creating opportunities across fixed income, but uncertainty around inflation and interest rates makes flexibility, selectivity and disciplined risk management especially important.

Some investors are questioning how much further this year’s rally can run with the S&P 500 Index up 12.3% through the first eight months of the year. Encouragingly, history suggests that strong starts tend to persist; when the S&P 500 has gained more than 10% through August it has advanced from September through December in 25 of 28 instances, an 89% positive hit rate.

Investors can’t get enough of ultrashort bonds. Driven by concerns over high equity valuations and rate volatility as the U.S. Federal Reserve mulls over the direction of interest rates, capital preservation strategies appear to be the elixir to help ease uncertainty. As such, ultrashort bonds have been seeing greater demand as traditional safe havens fall short on yield or carry unwanted duration risk.

2026 began with 10-year Treasuries right around 4%, which many viewed as a comfortable place. The comfort came from some simple math—2 plus 2 equals 4. The long-term real yield on the 10-year Treasury was around 2% and the Fed’s inflation target is 2%.

Market volatility persisted in August as investors were again forced to reassess escalating tensions and an exchange of military strikes in the Middle East, while softer labor-market data was countered by mixed inflation readings.

With so much attention focused on what the Federal Reserve (Fed) might do at its policy meeting next week, it’s a good time to look back at history to get a sense of how stocks might respond should the Fed hike rates as the market (barely) expects.

Elevated interest rates have investors scrambling for yield, and munis have been ready to answer the call with tax-exempt income.

For much of the past decade and a half, investors saw little reason to favor bonds over equities. Yields were low and returns were muted, especially in passive strategies. Equities seemed to offer a much clearer path to long-term capital appreciation. For many investors, bonds were, at best, ballast: a dull but generally stable component of a broader portfolio. Then the experience of 2022 had investors questioning even that view, as areas of high quality fixed income generated equity-like losses that eroded much of the prior decade’s real return.

LPL Research analyzes rising U.S. debt, Treasury yields, and fiscal trends, highlighting implications for markets and investors.

Labor Day signals more than summer’s end. It marks a return of focus to the economic and market forces that will shape the remainder of the year. From resilient earnings and record AI spending to rising bond yields and the midterm elections, there is no shortage of forces shaping the market outlook.

If you’re planning on driving anywhere this Labor Day weekend, be prepared to pay the highest gas prices ever for this time of year. The national average hit $4.14 per gallon on Thursday, an approximately 30% increase from last year, according to AAA.

Bond markets around the world have trembled in the last week, as uncertainty continues to rise. A mix of geopolitical, trade, debt, and currency pressures have put immense pressure on yields. The Yen carry trade situation alone has soaked bond markets, but when combined with U.S. debt fears and Hormuz concerns, the picture has shifted.

Chris Galipeau discusses high-conviction insights that go beyond media headlines.

If you look deeply into a speculative bubble, you can already see the collapse. If you look deeply into a market collapse, you can already see the bull market. The road up and the road down are the very same road. Even so, aside from knowing that our investment position presently requires a safety net regardless of shorter-term conditions – we have utterly no opinions, preferences, or scenarios about the market outlook even a month or a quarter from now.

Before I discuss why I disagree with the “AI bears,” I want to state that I respect their opinions, have evaluated their concerns, and have simply derived a different set of conclusions. That is an important statement, because this particular group of “AI bears” includes some of the sharpest risk minds in the business, and they have been early to almost every warning that later mattered.

The “K-shaped” divide endures even as it evolves. Higher-income households keep benefiting from equity gains, home price appreciation, and solid earnings, while lower-income households face mounting pressure from elevated costs and tighter credit. But recent data suggest the story is becoming more nuanced.

What if you could capture the potential gains of the S&P 500, but limit your losses if the market goes down? Or earn above-market income given the right stock market conditions? How about gaining some market exposure while protecting principal with FDIC insurance, up to applicable limits?

Products and services often benefit from great marketing. A catchy commercial, headline, or gimmick can attract potential customers. Sometimes marketing can be so effective that customers seek or support an average or even inferior product.

Global fixed income and equity ETF strategies posted gains and saw inflows surge in August, even amid ongoing macroeconomic turbulence and elevated long-term borrowing costs. International equities maintained their year-to-date lead over U.S. stocks throughout the month, led by notable strength in emerging markets.

Stocks have enjoyed a powerful run off the spring lows and have largely shrugged off concerns around growth, inflation, higher interest rates, the effects of artificial intelligence (AI), geopolitics, and policy uncertainty. As the calendar turns to September, however, they are entering what has historically been, from a seasonality perspective, the most challenging month of the year for equities.

The saying “May you live in interesting times” is becoming relevant in the bond market for all the wrong reasons. “Interesting” usually means “trouble.”

On Wednesday, September 2, State Street Investment Management announced the debut of the State Street SPDR UC Investments 90/10 Endowment Strategy Index ETF (UCBG). Notably, this fund was created through a collaboration between State Street and UC Investments, the investment arm of the University of California.

The month of August reminded many investors that the markets rarely move in a straight line. A combination of encouraging economic fundamentals, uncertainty in the bond market and renewed geopolitical turmoil led to increased volatility and shifting market leadership. But the underlying backdrop reinforced that the US economy continues to expand at a sustainable pace.

August was a good month in financial markets, with the S&P 500 up around 2.7%. The market leaders came from the commodity complex, with gold and bitcoin (not sure how this should be classified) being the two top performers.

Record fixed income ETF inflows in August pushed year-to-date ETF totals past $1.4 trillion, with short-term bonds leading the surge.

The high-yield market appears expensive at first glance. Spreads sit near the tight end of their historical range, which implies limited compensation for credit risk. However, spreads relative to their historical levels do not capture the full opportunity set of the asset class. Corporate fundamentals remain healthy, defaults are low, and the quality of today’s high-yield universe is higher than its long-standing reputation might suggest.

The backup in global yields since late February has reignited the debate over the potential knock-on effects for corporate borrowers, particularly through higher refinancing costs and weaker debt-servicing capacity.

A credit-allocation problem is complicating the Fed’s dual mandate, with current policy restrictive for many consumers and weaker borrowers, but less so for large corporates, higher-quality issuers, and borrowers with access to private credit.

Beneath relatively muted index-level volatility, single-stock implied volatility remains high. In today’s low-correlation environment, individual stocks are moving more independently, keeping single-name volatility high even as those moves offset at the index level.

Our real gross domestic product (GDP) forecast for 2026 is 2.5% (based on our Global Investment Management Survey) versus the Federal Reserve’s (Fed's) forecast of 2.2% and the Wall Street consensus of around 2%. The economy remains resilient and the consumer is strong.