Displaying items by tag: fixed income

Emerging market (EM) bonds are increasingly attractive as EM governments have shifted from deficits to surpluses, while developed markets (DM) have accumulated debt and fiscal imbalances. EMs maintain stronger fundamentals, including lower government and private debt, greater central bank independence, and higher real policy rates, factors that enhance stability and yield potential. 

Unlike DMs, EM policymakers have generally resisted moral hazard, allowing inefficient firms to fail rather than absorbing private risk, preserving long-term financial health. Over the past three decades, EMs have achieved persistent current account surpluses through fiscal discipline, contrasting with DMs’ crisis-prone fiscal dominance and policy coordination.

Actively managed EM strategies, such as VanEck’s, have demonstrated resilience through global shocks, reinforcing the case for a strategic EM debt allocation in modern portfolios.

Finsum: With DMs constrained by debt and low yields, EM debt offers compelling diversification benefits, higher returns, and sounder fundamentals.

Meta’s $30 billion bond sale drew demand four times greater than supply, underscoring strong investor appetite despite the company’s stock plunging more than 11% after disappointing earnings. The funds will support Meta’s aggressive AI expansion, which some analysts say reflects Mark Zuckerberg’s relentless spending, but one backed by over $100 billion in annual revenue. 

While shareholders worry about mounting costs, debt investors see little repayment risk, especially as Meta’s recent quarterly income, excluding one-time charges, topped $18.6 billion, surpassing major corporations combined.

Analysts argue demand for Meta’s bonds stems from investors seeking stable, high-quality issuers rather than fear of missing out on AI. By contrast, unprofitable AI startups like OpenAI or Anthropic remain reliant on equity financing, as debt markets favor established tech titans with proven cash flows and tangible assets.

Finsum: Other tech heavyweights are also leveraging strong balance sheets and low borrowing costs to fund infrastructure such as data centers and GPUs, so infrastructure could be a play. 

Coinbase Asset Management and Apollo have partnered to launch tokenized credit products, combining Apollo’s private credit expertise with Coinbase’s blockchain infrastructure to introduce new stablecoin-backed strategies in 2026. Their initiatives follow the GENIUS Act, which established the first U.S. federal framework for stablecoins and is expected to drive the market to $3 trillion by 2030. 

Meanwhile, fund managers such as Hamilton Lane and Laser Digital have begun tokenizing credit funds via KAIO, a protocol purpose-built for institutional-grade onchain assets, with over $200 million already tokenized. KAIO, backed by Nomura, recently integrated with the Sei blockchain to provide fast, compliant access to funds like Hamilton Lane’s senior credit platform and BlackRock’s ICS US Dollar Liquidity Fund. 

In a related move, Securitize announced plans to go public through a merger with Cantor Equity Partners II, valuing the company at $1.25 billion and positioning it at the forefront of a $19 trillion market for real-world asset tokenization.

Finsum: Demand for tokenized assets is rising sharply, with Broadridge reporting that while only 15% of asset managers currently offer tokenized funds, 41% plan to do so soon.

U.S. Treasury yields fell sharply on Thursday, with the 10-year yield dropping below 4% following a weaker-than-expected Philadelphia Fed survey showing deteriorating regional economic conditions. The 10-year Treasury yield declined over 7 basis points to 3.98%, while the 2-year yield dropped to 3.42% and the 30-year fell to 4.59%, marking their lowest levels in months. 

The decline came as stocks tumbled, led by bank shares, amid growing concern over bad loans, trade tensions, and the ongoing U.S. government shutdown. With the shutdown delaying key economic reports, investors are turning to Fed speeches for clues ahead of the October 28–29 FOMC meeting, where futures markets now overwhelmingly price in a 25-basis-point rate cut.

Federal Reserve officials offered conflicting views on how quickly to cut interest rates given a weakening labor market and geopolitical uncertainty. 

Finsum: Now could be the time to jump on treasuries as yields slump and prices are driven up on the uncertainty. 

As investors prepare for year-end taxes after a volatile 2025, many are exploring ways to reduce their tax burden through strategies like tax loss harvesting and structural portfolio adjustments. Active ETFs, according to T. Rowe Price’s Kevin Signorelli and Chris Murphy, can play a key role in minimizing tax impacts. 

ETFs inherently generate fewer taxable events than mutual funds due to their creation and redemption mechanism, which limits capital gains distributions. Active ETFs add further efficiency, often operating at lower costs while maintaining flexibility to manage holdings strategically. 

They also offer effective vehicles for tax loss harvesting, allowing investors to shift from underperforming funds into more promising active strategies, such as international or tech-focused ETFs. 

Finsum: As active ETFs continue to expand, they provide investors with more tools to optimize portfolios for both performance and tax efficiency.