Central banks are hiking rates due to high energy prices, resilient economic growth and a stable labour market. While these drivers could reverse, structural forces have also helped to push yields higher.

Over the past week, we were in Bangkok for our semiannual pilgrimage to the IMF-World Bank meetings where we held over 50 meetings with finance ministries, central banks, multilateral officials and peers in the financial sector. On the global macro front, the mood remained one of uncertainty. While the global outlook has remained relatively resilient in the context of ongoing wars in Russia-Ukraine and the Middle East, it is evident that geoeconomic fragmentation and growing fiscal challenges, alongside the AI boom, are beginning to weigh. Benefitting from their recent history of prudent policies, emerging markets continue to muddle through the shocks.

Heatwaves and wildfires are recurring economic shocks, yet much of traditional fixed income still lacks direct environmental impact at a time when green bonds look increasingly compelling.