Regional Fixed Income Market Overview

The report highlights a more cautious global policy backdrop, with both the Fed and ECB forced to balance weaker growth risks against renewed inflation pressure from the US-Iran war and elevated energy prices. While rate hikes are not the base case, the path toward easing looks slower and more conditional than before.

US and European rates remain under pressure as markets reassess how long central banks may need to stay restrictive. The US curve has shifted higher across most maturities, while Europe’s rate outlook has become more vulnerable to imported inflation, especially given the eurozone’s dependence on external energy supply.

Regional sovereign bonds recovered modestly as hopes for Middle East conflict resolution improved market sentiment, though spreads remain elevated. New issuance activity continued, with Türkiye and Bosnia accessing international markets, while wider regional spreads increasingly reflect broader EM risk repricing rather than Georgia-specific credit deterioration.

Regional corporate bonds also posted gains, led by stronger performance in Kazakh and Uzbek names, although returns remained uneven due to issuer- and country-specific factors. Primary market activity stayed open, with Turkish banks remaining active issuers of high-carry USD supply, while Georgia’s local corporate bond market continued to expand with GEL 160 million of new public issuance in Q1 2026.