Vishy Tirupattur, Morgan Stanley's Chief Fixed Income Strategist, discusses the 2026 outlook for the global fixed income market from the Morgan Stanley Asia Pacific Summit. He highlights that micro trends will drive markets towards a generally positive stance on risk, with continued disinflation and growth converging towards potential. The U.S. economy remains pivotal, supported by a resilient consumer and AI-driven CAPEX. Government bond yields are expected to stay range-bound, with a front-loaded rally followed by a drift higher, and curve steepening is a high conviction call. AI financing will bring credit markets into focus, with investment-grade issuance dominating data center financing, leading to potential spread widening. Carry remains a key driver for credit returns, with segments insulated from AI-related supply, such as U.S. high yield and agency mortgage-backed securities, poised to outperform. The challenges for 2026 are described as less about macro shocks and more about micro shifts and market nuances.
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