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2026 has started with a wave of hybrid issuance, with names like Enel and Telefonica leading the charge in a busy primary market. On 12 January, with markets firmly open despite geopolitical headlines, Telefonica proactively managed its outstanding hybrid maturities by announcing a tender offer for its three shortest outstanding hybrids, alongside the issuance of two new euro-denominated green hybrid bonds.

After a week that saw 10-year Japanese government bonds (JGBs) hit yields not seen since the late 1990’s (and record highs for 30-year and 40-year maturities), alongside one of the most interesting Davos conferences in years, which was held in the shadow of the latest push by President Trump to “acquire” Greenland, it is helpful to take stock of where this leaves the global geopolitical landscape and financial markets.

For global bond investors, predictable central bank activities are an important component of long-term strategy. But the Trump administration’s unprecedented pressure on the Fed, including a criminal probe of Chair Jerome Powell, is driving investor fears about the independence of the world’s most important central bank and the reliability of monetary policy.

This week we have seen the continuation of a remarkably strong technical in the credit markets. At the time when S&P 500 index was selling off by nearly 2% on the day, while government bonds were also in the red, spreads in Additional Tier 1s (AT1s), which always represent a higher beta product in the corporate bond universe, were barely changed.

With spreads well below long term averages and government bond curves pricing in what central banks are likely to do in the next few quarters, opportunities for capital gains through spread compression or sustained rallies in government bonds appear to be limited.

TwentyFour Asset Management’s Felicity Juckes shares her take on volatility in Q4 and why we remain optimistic on credit heading into 2026.