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By   Arif Husain, CFA

Arif Husain on Fixed Income at T. Rowe Price

May 2026

View Transcript

Hello, I’m Eva Wu, and I’m pleased to share our April 2026 monthly asset allocation update.

Let me walk through what has driven markets this month, how markets have responded, and how we have positioned portfolios.

First, markets are being driven by a clear macro chain: geopolitics, oil, inflation, and policy. Disruptions to energy flows, particularly through the Strait of Hormuz, have introduced a meaningful supply shock, pushing energy prices higher and raising the risk of more persistent inflation. While there are signs of potential de-escalation, the timing remains uncertain, and markets are increasingly focused on second-order effects—how higher energy costs feed through to inflation, government and central bank policy and, ultimately, growth.

Second, despite the uncertain backdrop, markets have remained relatively resilient. Equity markets have been supported by still-decent real growth rates, earnings expectations and ongoing AI investment. However, beneath the surface, leadership has continued to rotate away from large-cap growth and toward value and more cyclical areas. At the same time, investors are increasingly focused on the returns from AI-related capex, as well as potential risks in areas such as private credit. In fixed income, the adjustment has been more pronounced. Yields have repriced higher, particularly at the front end, reflecting inflation concerns, while credit spreads have widened modestly but remain orderly.

As a result, we have positioned portfolios more cautiously, while remaining modestly risk-on. We reduced our overall equity overweight and shifted away from more energy-sensitive regions such as Europe, while increasing our tilt toward more resilient areas, including US large-cap value. In fixed income, we added back some duration to take profits as yields have moved higher, while remaining cautious overall. We also reduced our exposure to emerging market debt to limit risk and increased cash slightly to maintain flexibility.

Overall, while the current shock will likely pass, it may take longer than expected. We remain focused on diversification, inflation resilience and maintaining flexibility as markets adjust to a more uncertain environment.

Thank you for listening, and we look forward to sharing our next update in May.


Transcript

What is fixed income? Why do people invest in fixed income? And the answer is to solve a problem. Diversification, income, whatever it might be. So fixed income at it's very, very heart, is a solution. It's a solution to a client's problem.

So we have very, very deliberately at T. Rowe Price, under my leadership and before that, been very, very clear that we wanted to build all the excellence and the components to provide solutions, however the client wants them. So that meant building a fundamental, world class, bottom up investing platform. That meant building a world class, top down, macro platform. That also meant building a world class, best in the industry quant platform.

And so if you're a portfolio manager at T. Rowe Price, you have all that research. And really the way we put it together and the way the portfolio managers put it together is they pick and choose. They major-minor on the different parts of the platform. But each of the underlying pillars is extremely strong and the culture binds it together, globally collaborative.

So we have the tools to answer all those questions and solve the problems that the clients need us to solve, whether it's less tracking error or high tracking error.

Arif Husain, CFA Head, Global Fixed Income and CIO
Mar 2026 Ahead of the Curve Article

War-driven energy price spike increases risk of central bank policy errors

Energy price spikes are reshaping inflation and central bank policies.
By   Arif Husain, CFA
Feb 2026 From the Field Article

How the new AI economy is reshaping global credit markets

Discover how AI-driven capital spending is tapping fixed income markets for funding.
By   Mark Stodden, CFA, Tom Dignacco, CFA

 

IMPORTANT INFORMATION

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.  

It is not intended for distribution to retail investors in any jurisdiction.

2020605-5322772

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