While 2024 was dominated by the run up and eventual outcome of the U.S. Presidential election, 2025 marked a different narrative for the global economy and fixed-income markets: the new administration’s policy agenda.

“The 2025 market narrative, certainly in the first half of the year, was almost exclusively driven by the incoming administration’s policy agenda; specifically, trade and tariffs, tax cuts and their fiscal knock-ons, the independence and leadership of the Fed, as well as how the U.S. sees its role overseas in an ‘America First’ world,” said Stephen Dulake, co-head of global fundamental research at J.P. Morgan.

The global economy and fixed income markets recorded unexpected levels of resilience in 2025, according to Michael Maras, head of global fixed income, currencies and commodities research at BofA Securities. Growing policy uncertainty and record U.S. effective tariff rates since WWII led central banks to 150+ rate cuts delivering the loosest financial conditions since Covid.

“This has reinforced strong investor demand for yield in bond markets, producing positive total returns across all fixed income markets,” he said. “Expansionary fiscal policies, huge retail inflows into European Fixed-Maturity Funds (FMF) and the growing funding of the AI capex boom in IG credit and securitized markets have lifted outstanding fixed-income debt by over $5.5trn this year, the third fastest growth on record.”

With US 10Y yields spending most of the year in a well-defined trading range, and the USD declining in line with expectations, carry trades in EM Fixed Income and Credit markets delivered very good returns: EM local currency debt returned about the same as the AI-fueled S&P while EM hard-currency debt returned well above US Treasuries, he added.

In this environment, respondents to Extel’s seventh annual Global Fixed Income Team ranking recognized a familiar group of names getting it right.

J.P. Morgan was once again voted No. 1 based on the opinions of 6,707 bond and credit specialists at about 1,690 leading asset management firms around the world. BofA Securities once again took second place.

There was little movement further down the overall leaderboard. Barclays and Morgan Stanley repeated their third and fourth place finishes. Deutsche Bank moved up one place to round out the top five.

In this year’s survey, macro sectors were once again polled by region for the US, Europe, Latin America, Japan, Asia ex-Japan, and Emerging EMEA. Credit sectors were polled for the US and Europe. Additionally, four global sectors were polled. 

J.P. Morgan’s Dulake says his firm is able to remain a top team by being fast and flexible—two attributes that were needed in even larger supply this year.

“To say that policy headline volatility was elevated this past year is an understatement and, against this backdrop, we found ourselves changing our baseline forecasts with increasing frequency,” he said. “As Keynes said, ‘When the facts change, I change my mind.’  I think as the year progressed, we’ve also had to recognize that the macroeconomics effects of tariffs and reduced immigration have not been as big as we’d originally thought and I think clients have appreciated our transparency on this front.”

BofA’s Maras reported that his firm saw strong investor demand for more content on geopolitics, and what drives the global economy and the potential impact on capital flows. In response, the firm has expanded its conferences and investors trips that offer clients the forum to interact with policymakers and experts.

Additionally, the good performance of consensus rate curve steepener trades and the convergence of global yield curves have led macro investors to seek returns in cross-market trades (EM vs credit, vs Rates, etc) and trade ideas beyond duration (inflation, asset swap spreads, funding, etc), he added.

“We have also seen very strong demand for new quantitative tools that could explain and predict macro cross asset flows and relative value pricing.,” he said. “The rapidly growing exposure of CTA funds across EM assets led our EM quant and equity derivatives teams to collaborate and launch two new CTA models for EM Rates and EM FX markets.  Both models have been well received by our clients."

On the credit side, BofA continues to see strong demand in carry trades and the need to diversify into new corporate credit markets. “We have therefore expanded our content on high-yielding sovereign credits (e.g. Panama) and frontier currencies (e.g. Egypt, Nigeria) and increased further our global corporate credit coverage: we increased our Asia corporate credit coverage by 10% with the share of ex-China credits (Australia, Korea, Taiwan, India, Japan, etc) now accounting for 73% of our Asian coverage (from 63% last year).”

J.P. Morgan’s Dulake, crediting his credit research origins, observed that how credit market structure has evolved represents an ideal metaphor in terms of what investor clients expect of J.P. Morgan Global Research.

“The rise of portfolio trading has materially increased clients’ speed of execution, increasingly evolving to enable transactions on a cross-asset basis, with clients simultaneously executing across rate, credit and mortgage markets,” he said. “From a research perspective, clients clearly value speed to market, something we touched on given policy headline volatility, as well our ability to collaborate and present a considered view across multiple asset classes.” For examples, he highlighted the work the firm did on Section 899 of the 2019 National Defense Authorization Act in respect of tariffs as differentiating, as well as its pushback on the notion of wholesale de-dollarization.