Corporate Bond Market Insight - 2025 Year in Review

Key takeaways from the latest edition:

 The beginning of the year saw a slew of executive orders from the newly elected president, adding significant economic uncertainty. The deterioration in national finances prompted Moody’s to downgrade the United States sovereign debt rating from Aaa to Aa1 in May.

The Fed ended its policy of quantitative tightening in October, but we believe a new chair, set to take office in May 2026, is likely to be far more tolerant of inflation. 

November marked both the end of the longest government shutdown in US history, a one-year trade truce negotiation with China and the announcement of new trade frameworks with several other Asian nations.

Investment-grade (IG) corporate bonds performed well overall in 2025  with improving balance sheets, more IG rating upgrades than downgrades and supply continuing to meet robust demand.