Bond markets

16 September 2026, 15:17 UTC Chief Investment Office GWM Investment Research

News, views & trades Bond markets Authors: Rochus Baumgartner, Co-Head CIO Credit, UBS Switzerland AG; Chris Ptak, Analyst, UBS Switzerland AG; Elena Guglielmin, Analyst, UBS Switzerland AG; Peter Din, Analyst, UBS Switzerland AG; Fabrice Schwarzmann, CFA, Analyst, UBS Switzerland AG; Claudia Sigl, Analyst, UBS Switzerland AG; Sebastian Petrich, Analyst, UBS Switzerland AG; Peter Prek, CFA, Analyst, UBS Switzerland AG; Alexandra Bossert, CFA, Analyst, UBS Switzerland AG; Geoff Wan, CFA, Analyst, UBS AG London Branch

• Corporate bond returns have been negative since our last NVT report two weeks ago. While credit spreads have remained largely resilient, the negative performance has been driven almost entirely by the sharp rise in government bond yields.

• With all-in yields near historical highs, corporate fundamentals broadly sound and market technicals expected to remain supportive, we continue to see value in select corporate bonds. Our core preferences include medium-duration bonds of high-quality BBB- and A-rated issuers, such as Freeport-McMoRan, Nykredit, select Canadian banks and BASF, highlighted in this note.

• In addition to commenting on various earnings reports, Source: Dreamstime rating actions and M&A developments, we are making two changes to our issuer credit outlooks. Specifically, CIO Global Wealth Management (GWM) may include we upgrade Freeport-McMoRan to Improving in this securities in this report that have not been registered under report. Following its upgrade to the investment-grade Federal US registration rules and individual state registration category, however, we revise our outlook on Renault rules (commonly known as "Blue Sky" laws) or may not be from Improving to Stable. eligible for investment under the policy of GWM Americas.

Rates sold off… primary market issuance following the summer lull. Corporate bond returns have been sharply negative since our last report, driven almost entirely by the global rise in This resilience reflects continued strong demand for government bond yields over the past two weeks. Oil prices corporate credit. Although persistent rate volatility and climbed again above USD 100 per barrel amid escalating negative total returns could eventually weaken this support, tensions in the Middle East, while an earlier announcement we expect decade high yield levels to remain the dominant of a US Treasury buyback fell short of market expectations. driver of investor flows for now. US yields subsequently moved higher across the curve, with the front end underperforming as markets priced in nearly We remain constructive on select corporate bonds four rate hikes over the next 12 months ahead of today's Accordingly, and with corporate fundamentals also FOMC decision. European government bonds also sold off, remaining broadly sound, we maintain a constructive with yield curves bear-flattening after the ECB's hawkish stance on corporate bonds. However, with risk premia rate increase and upward revision to its inflation forecasts near historical lows, selectivity remains essential. Uncertainty last week. surrounding growth, geopolitics, and trade policy is likely to persist, while M&A activity, hyperscaler issuance, and … but spreads remained resilient company-specific developments should continue to drive Credit spreads, by contrast, were relatively stable. While the dispersion across sectors, rating buckets, and individual bifurcation within USD credit markets persisted and CCC- credits. rated bonds underperformed, risk premia across most other rating segments were broadly flat despite the increase in

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As highlighted in our note, "Conviction Calls to put cash to Figure 2 - Performance work," we favor intermediate- to longer-dated bonds issued by…