Global Weekly Fixed Income Report - September 25, 2026
Executive Summary
The long end broke this week, and we are closing the position we have called our highest-conviction trade for three editions. The 30-year touched 5.501% on Thursday, its highest since June 2004, and finished at 5.49%. Over the week it rose 15 basis points while the 2-year rose 5. That is the exit condition we published on 11 September, and we are acting on it rather than explaining it away.
The shape of the move matters as much as the size. The front end barely participated, because the Federal Reserve had already done what the front end was pricing: on 16 September it raised the target range 25 basis points to 3.75% to 4.00%, the first hike since 2023, with projections pointing to one more before year end. Everything beyond three years then sold off on its own account. 2s10s steepened from 25 basis points to 36 and 2s30s from 58 to 68.
We want to be precise about the mechanism, because we got the trigger right for the wrong reason. We wrote that a long end rising with the front would mean the market had stopped crediting the Fed with control of inflation. That is not what happened. Gold fell 2.3% to $4,321.20 and silver 3.5% to $64.801. An inflation-credibility scare bids gold; it does not sell it off. What repriced was the real rate and the term premium, now at a ten-year high, driven by energy costs, resilient growth, government spending and a wave of corporate issuance funding the artificial intelligence capital cycle. The thesis behind the position was an anchored long end. The long end is not anchored, whatever is unanchoring it, so the position goes.
African credit widened everywhere, and for the first time in a month the spread numbers agree with the yield numbers. All six sovereigns lost ground against matched Treasuries. Nigeria was the most resilient at 5.1 basis points wider, then Angola at 6.3, Ghana at 8.4 and South Africa at 8.6. Last week we wrote that the complex was trading in a 13 basis point range and that country selection was earning nothing. That reversed hard: the range this week runs from 5.1 to 72.1, and the dispersion showed up in precisely the two names we had already acted on.
Egypt widened 45.4 basis points of spread, the worst of the performing five, which vindicates the cut to neutral we made a week ago. One caution on the headline: Egypt's 58.1 basis point average yield move is flattered by a bond with six weeks left to run whose yield jumped 547 basis points on arithmetic rather than information. Strip it out and Egypt widened 33.6, still roughly double the rest of the complex and still concentrated in the 4 to 8-year belly we no longer own.
Senegal widened 85.6 basis points and is the week's real damage. Restructuring parameters emerged proposing a haircut of 50% to 60% on principal and accrued interest, with recovery estimated as much as 60% below par. Our August work modelled a clean reprofiling at about 69 cents and a Ghana-style treatment at about 36. The announced terms sit at the bottom of that range and below it. All three bonds now trade between 50.6 and 50.9 cents, which prices the optimistic end of what Dakar has put on the table. We added to this position last week on the coupon transfer and that was wrong. We are reversing the addition.
