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Investment Strategy

Published October 13, 2025 | 10 min read time

Weekly market insights and possible impacts on investors from the Wells Fargo Investment Institute Global Investment Strategy team.

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Fixed Income Spotlight: Unpacking corporate credit spreads

  • Economic slowdown and labor-market concerns have not been felt in credit markets, as credit spreads are near historically tight levels.
  • We continue to recommend exposure to credit markets, but we prefer a higher quality credit strategy. Our current guidance in investment-grade (IG) credit is favorable, while our guidance on high-yield (HY) credit markets is neutral.

Equities: Stocks near all-time highs versus Fed rate cuts

  • Historically, rate cuts by the Federal Reserve (Fed) were a tailwind for U.S. equity performance — even when stock prices were near all-time highs.
  • We expect a strengthening U.S. economy and lower interest rates to drive corporate profitability and performance for U.S. Large Cap Equities.

Municipal Bonds: Government shutdown and Medicaid

  • Medicaid cuts were already posing a challenge for public health-care providers in U.S. states and counties.
  • The government shutdown has led to a lapse in some Medicaid-related programs, amplifying short-term credit challenges and casting a spotlight on the timeline for future Medicaid cuts.

Real Assets: Silver spotlight: Poor man’s gold outperforming

  • Silver has outperformed S&P 500 Index and even gold over the past three years.
  • We believe that the key supports to the rally are still in play and would view price weakness as an opportunity to add exposure to both silver and gold. We remain favorable on Precious Metals.

Alternatives: Distressed prospects remain despite lower rates ahead

  • Although traditional measures show moderating default rates, the inclusion of distressed exchanges highlights the continued upward trajectory in credit stress.
  • Despite economic growth improvement, we expect Distressed Credit sub-strategies to remain attractive as Fed rate cuts may not sufficiently ease pressure on highly leveraged firms.

Article written by:

Investment Strategy Analyst
Investment Strategy Analyst

Municipal Bond Analyst
Investment Strategy Analyst
Global Alternative Investment Strategist