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Since their introduction in 2013, AT1 bonds have acted as a valuable kicker for many fixed income funds, having consistently delivered excess return over more mainstream credit markets such as high yield bonds over the medium term.

With tensions in the Strait of Hormuz increasing over the weekend and markets getting used to oil prices well in excess of $100 per barrel, this seems an opportune moment to zoom out and look at the state of play in fixed income markets, considering the unsettling reality of a longer-than-expected conflict in the Middle East.

Last week, European regulators took another step in their long journey towards a single European banking regime, otherwise known as “banking union”.

Corporate hybrid issuance is on track for a record year in both Europe and the US, driven by expanding supply well beyond the traditional utilities, energy, and telecoms issuers.

Sharp swings in government and corporate bond markets since the onset of the Middle East conflict pose interesting questions for fixed income investors.

TwentyFour Asset Management’s Jack Daley reflects on a strong start to 2026 for investment grade credit, before geopolitical escalation in the Middle East drove increased volatility later in the quarter and shaped market conditions.