Benign inflation, a dovish central bank and healthy yields have helped boost the global attraction of European government bond and credit markets. With further monetary easing expected, European fixed income continues to look selectively compelling.
Despite ongoing policy uncertainty and tariff-related volatility, we are cautiously optimistic thanks to resilient economic fundamentals, broadening equity market performance, and the potential for pro-growth policy shifts later in the second half of 2025.
While Middle East tensions are driving near-term market volatility, this focus is likely to be temporary as attention soon returns to major July and August policy decisions.