An exiled monarch and a peasant woman are at the origin of the Magdalena. The Polish monarch Stanislaus I had to take refuge in France after losing the Battle of Poltava and, with it, the War of the Polish Succession. After having to withdraw due to lack of French support, he was compensated by the Duchy of Lorraine, where he is said to have first tasted a sweet roll baked by a peasant woman named Madeleine around the middle of the 18th century.
Thanks to this peasant woman and the commercial work of the Pole, today we find pastries on the shelves muffinsof all flavors and shapes. In the fixed income sector, one can now find bigger or smaller muffins to eat and even choose to add an additional ingredient of profitability.
The conservative investor, although he started the year with doubts, finally reaped this year, at least, what was promised by the market. However, there is still dessert based on the coupons still in the window, to which you could even add some toppings additional in the coming months.
Apart from culinary comparisons, even if the current pricing context has led to the to go out of investors overweighting bonds is more or less complete (compared to recent years), gains are still to come. For now, those who have been invested since the beginning of the year was able to gain 2.5% approximately if your entire portfolio is focused on sovereign debt at 9.5% who collected high yield (this, measured through the Barclays Bloomberg bond indices). In between, the rest of the debt asset classes, such as corporate debt, which yielded more than 5%, or emerging debt, with just over 8 percentage points of gain.
“Rates have not reached their highest point but they have reached the fastest rate we can remember in recent times and when rates are high you have to buy fixed income,” they point out. of Mutualidad. “Public debt is starting to push aside the normalization scenario and we can anticipate that it should behave very positively in the times to come,” they add.
The investor who decides at this time to buy fixed income securities does so knowing that he has a double wind in his favor. The first is the coupon, which still ensures positive real returns despite the very strong revaluation of recent months. And, secondly, the future movement of prices which, if they follow logic and the trajectory of falling rates is maintained, will continue to increase until a floor is anticipated for the price of silver.
In any case, the only guaranteed are the coupons that are purchased and these, on average worldwide, are at 3.3% per yearalways above inflation expectations both in the Eurozone and in the United States, where in 2026 a CPI of 2 and 2.4% is expected respectively. Public debt, globally, offers an average yield of 2.8%. If the bonuses are private, from companies, the remuneration amounts to 4.7% while if you prefer the high yield The expected yield climbs above 7%.
On the Old Continent, the coupons to buy now range from 2.9% which the public debt gives you to 6.3% excluding investment. In its entirety, Investing in Eurozone bonds currently offers a yield of 2.7%7 tenths above medium-term inflation. “Euro credit continues to establish itself as one of the most attractive asset classes in terms of global rates,” underlines Fidelity. “Avoiding a recession is essential for macroeconomic credit fundamentals and further easing by the ECB is likely to increase appetite for this asset class,” they add.
On the other side of the Atlantic throw They are a little older. On average, you can get 4.2%or almost 2 percentage points higher than the CPI estimated for 2026. North American public debt has an average coupon of 3.7%, or one point less than corporate debt. In high yield You can get at least 7% per year.
“As the economic situation slowed, central banks took advantage of the start of Fed budget cuts to ease monetary conditions, and the geopolitical situation deteriorated, we saw how the long terms of public debt once again served as a support for portfolios in episodes of volatility, once again showing negative correlations between stocks and bonds”, says Ignacio Fuertes, investment director of Miraltabank. “Due to geopolitical uncertainty and asymmetric returns given low credit spreads and especially the high yield, that we continue to favor quality and duration, as well as inflation-indexed bonds, while real interest rates continue to fall,” adds the expert.
Regarding the type of assets, Julius Baer favors corporate debt over others, but maintaining a credit quality filter. “Investor sentiment appears to have changed since the declines in early August and the current positive tone has favored all fixed income assets, particularly high yield“, they assert. In fact, they point out that this is already noticeable in the primary issuance market with 40 billion issued in the United States alone in September, above the historical average of 30 billion.
“With this, we are not saying that risks must be increased since we continue to see greater value in corporate credit, although valuations are starting to be demanding and we must take into account that the most weak refinance their debt at higher prices. default values “Investors recognize the benefits of higher public yields and attractive credit spreads, which translate into higher long-term income,” says Vontobel.
The extra “topping”
If there is no default, The profitability that the investor derives from the coupon he purchases is assured. However, The total return of this asset also includes a price appreciation component. The actuarial yield is composed of the coupon collected and the evolution of the price towards par (which can be positive or negative). The profitability obtained simply by remaining until maturity is called to carrywhile as time passes, yield It moves towards the short end of the curve, which under normal circumstances causes the price to rise (if not reversed).
This profitability is called drop-down returnas Icaria explains. Price changes also come from movements in the yield curve itself and not from the simple passage of time, and this occurs more over long maturities. A priori, in the months and years to come, the curve will rise as interest rates fall. “Historically, fluctuations in credit spreads have had minimal impact on long-term returns, making coupon income a key driver of stable returns,” says Vontobel.
If we look at what the market is discounting, within a year, interest rates in Europe will be 150 points below the current level. In other words, the deposit facility will be 2%. As for the United States, what investors are buying is a slightly larger rate cut, 175 points which would leave the benchmark at 3.25%.
“We believe there is still some way to go to continue generating good returns in this market. We continue to see greater potential in corporate fixed income since the to carry is higher even though spreads have been reduced relative to sovereigns,” says Rafael Valera, CEO and bond manager at Buy & Hold.
