We have arrived at the end of what was a tumultuous year. Looking back, perhaps the most important takeaway is that the fears of runaway inflation on the back of US tariffs never materialised. The forecast global recession and the fears of the bursting of the AI bubble were unfounded.

The One Big Beautiful Bill that was passed by US President Donald Trump has impacted yields and economic growth; however, its impact is hardly catastrophic. In the end, bonds behaved well, the US dollar lost a little of its shine, and investors were, by and large, beneficiaries.

As we head into the new year, the most likely scenario is a continuation of the trends from 2025. We think that US bond yields will remain around current levels, with much of the return being derived from interest accruals. This makes bonds an interesting proposition for investors. If all goes well, you will see a modest return on your investment; however, if there is a broader wobble, then bonds should perform quite well.

This asset class does serve as a bit of a hedge against the global environment. Looking forward, financial markets are expecting two interest rate cuts in the US this year. We think that slowing inflation might support a third or fourth cut as well, making the yield instruments an interesting prospect for 2026.