Anyone who was already invested in fixed income is experiencing a difficult start to the year, after an also complicated auction in 2024. Global bonds show losses of 1.4% only in the first half of January, and global corporate debt already falls by 1.2%. The price of bonds – leaving aside Wednesday’s session, which was positive – has fallen, and this is already reflected in defensive investment funds: vehicles that invest all or almost all of their assets in fixed income are now 0.25%, with Morningstar data from more than 300 funds, as of January 10.
Debt sales are widespread: if we look at the twenty main fixed income categories collected by Bloomberg, only one remains positive in 2025, and it is by very little: it is China’s aggregate debt, which scores a shy 0.18%. In this atypical start of the year, Fixed-income investors – those with greater aversion to losses – suffer more than stock market investors.
These losses are mainly due to the slowdown in the rate of rate cuts in the United States (which, when they finally occur, will boost bond prices). The market no longer expects any money price cuts from the Federal Reserve until June or July of this year. Inflation is making it difficult for the Fed, despite the fact that this Tuesday the data published in the United States, highly anticipated by the market, fulfilled the expected script: the consumer price index rose two tenths, to the 2.9% year-on-year, as estimated. The core CPI, which excludes energy and food, eased by one tenth, but is still at a high 3.2%; and on a month-on-month basis, the general CPI rose up to 0.4%.
The 10-year US bond reflected with purchases, and therefore price increases, that these data complied with the planned scheme. The profitability of T-Note, which behaves opposite to the price, fell abruptly from 4.76% to 4.65% after hearing this news (at the close of the European market it had risen to 4.67%). But, despite this rebound yesterday, The investor in the US bond still loses 1.4% in price in 2025. This has largely contributed to weighing down the main fixed income indices.
Beyond the T-Noteall the main sovereign debt references suffer sales in the secondary market, and rise in yields, so far this year, despite the fact that yesterday, like the US, they experienced a day of purchases. The yield on the 10-year Spanish bond is currently around 3.20%, compared to 3% at the start of 2025; that of the French is around 3.35%, and started the year at 3.19; the German has gone from 2.36% to 2.55%. It cannot be forgotten that sovereign debt has just reached profitability peaks in January, after knowing a powerful data on job creation in the US corresponding to December.
The stock market also celebrated the inflation data yesterday with purchases. Especially Wall Street, which managed to turn positive for the year. Europe, which had already been rising, also accelerated the increases. The EuroStoxx 50 ended the session with a rise of 1.10%, which is now up 2.84% in 2025. The Ibex 35 advanced 1.1% yesterday, and has already recorded 2.45% in the anus. The Dax was the most bullish on the Old Continent, appreciating 1.5% on the day and more than 3% in 2025.
Investors with more stock in their portfolio
Compared to the 0.25% left by the most cautious profiles (who, at most, invest 20% in the stock market, and the rest in fixed income), Investors who take a little more risk in their portfolios do manage to avoid losses during the year. The average profitability of moderate mixed funds, according to Morningstar, with data as of January 10, is 0.04%. Flexible portfolios account for 0.07%, which already allocate between 60% and 80% to variable income. And the riskiest, the aggressive mixed funds (with 90% or more in the stock market) rose 0.23%. Pure stock market funds are doing better at the beginning of the year: the vehicles that make up the Global Active Management League elEconomista.es they rise 0.43%.
Despite this complicated start, The year should be positive for fixed income, with the impulse of monetary policy. Roberto Scholtes, head of Strategy at Singular Bank, pointed this out this Tuesday in the presentation of his outlook for 2025. The bank foresees two Fed cuts, by half a point, and four in Europe, “which will allow the interest rate curves to bonds decline and revalue, which will generate quite positive returns,” he explained. Hence the entity foresees “that 2025 will be better than last year in the best quality fixed incomethat is, for public debt and investment grade corporate bonds,” Scholtes explained.
In any case, in a report published yesterday Wednesday, Amundi strategists warned that “fixed income as an asset category will be increasingly affected by uncertainty around fiscal policies and monetary.” For this reason, the firm maintains “a tactical approach regarding duration in the US and Europe, where we continue to look for opportunities in the expected steepening of the yield curve.” The good news, they explain, is that the Inflation will fall “faster than the ECB expected, which should boost real income.” All this points to the convenience of maintaining “a flexible positioning towards duration,” Amundi experts also see opportunities to explore in the future. corporate credit in Europe, the United States and emerging markets. What seems clear is that active management will be needed more than ever in this asset in the year that is beginning. In fixed income, it is time to extend maturities to the range of 3 to 5 years.
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