Invesco’s Danfield on Midyear Fixed Income Outlook

With the market roughly at the midpoint for 2025, investors and advisors are still assessing how changing macroeconomic conditions could affect their fixed income portfolio. This topic was discussed at length during the VettaFi Midyear Market Outlook Symposium, which brought together experts and portfolio managers to discuss a wide variety of investment approaches. Midyear Progress ReportJustin Danfield, senior fixed income ETF strategist at Invesco, joined a panel to discuss the state of play for the bond market. This panel was moderated by Todd Rosenbluth, head of research at VettaFi.  To get the ball rolling, Rosenbluth first asked for an assessment of how the fixed income market performed for the first half of the year. Danfield began by noting that the market has seen uncertainty from fiscal policy, geopolitical shocks, and other macroeconomic conditions. However, he assessed that fixed income has remained resilient through these moments.  Notably, Danfield pointed out that this resilience has amplified investor risk profiles for fixed income. As such, investors and advisors have sought portfolio exposure to a variety of fixed income sub-sectors, including global bonds.  “Investors still have that appetite for credit, because when you look at all-in yields, they’re still relatively on cycle highs,” Danfield noted. “For investors, we’re really seeing steady money come into the market and invest in these higher all-in yields. Positioning Around Rate CutsKen Chambers, EVP and fixed income strategist at PIMCO, also participated in the panel. When asked about potential rate cuts from the Federal Reserve, Chambers noted that he expects one to two cuts on the horizon, with the disclaimer that these potential cuts would be data dependent. Crucially, Chambers advised that the fixed income market doesn’t need to see rate cuts this year to perform well. However, he noted that an active approach can help when navigating the yield curve if a cut happens.  “Having an active approach on many of the strategies, being able to overweight or underweight parts of the curve to ultimately benefit from when those cuts happen, but also potentially avoid parts of the curve that may be less attractive,” Chambers added.  Strategies in DemandRosenbluth highlighted a symposium audience poll showing investment grade corporates as the most appealing fixed income strategy. He then turned to Danfield and asked him to weigh in on the audience’s sentiment.  Danfield agreed with the audience, noting that investment-grade corporates have remained resilient with attractive spreads. He added that the yields on investment-grade corporates are actually close to cycle highs.  “For long-term investors, locking in yields of above 500 basis points makes a lot of sense,” Danfield noted.  As a solution for building investment-grade corporate exposure, Danfield highlighted the Invesco Total Return Bond ETF (GTO B+). Despite being a total return bond strategy, Danfield noted that GTO holds significant exposure towards investment-grade corporates.  Looking at GTO, Danfield added that the fund is currently offering extremely attractive yield opportunities. As of June 24, 2025, the fund has a yield to maturity of 6.46%.  As another fixed income option for the moment, Danfield highlighted the Invesco Senior Loan ETF (BKLN B+). In particular, he noted that the fund is providing stronger yield than some high yield corporates while mitigating risk from interest rate shifts.  “Investors are looking at BKLN and saying hey, maybe the Fed’s not cutting, or even if they cut, we can still have higher yield than fixed coupon high yield while also staying short on the duration curve,” Danfield added.  For more news, information, and analysis, visit the Innovative ETFs Channel.