Perhaps the best market for government bonds is outside the United States.
George Bory of Allspring Global Investments pushes his clients toward countries whose central banks are raising interest rates or have different inflation dynamics.
“Bond markets everywhere have been racing toward price inflation. In countries like the U.K., certainly across Europe, and even in countries like Australia, we’ve seen a significant increase in expectations of central bank tightening,” he told CNBC. “Edge Edge” this week. “Now, some of these measures have already been implemented. The ECB raised rates just a few weeks ago. It is expected to do a little more. But unless the Fed validates these measures, it will have to act at a pace perhaps slower than what is priced in.”
Bory works as the Chief Fixed Income Investment Strategist at Allspring, an asset management firm primarily focused on fixed income, money markets and equities. According to Allspring’s website, clients range from financial consultants and advisors to businesses and financial institutions.
“Short to medium duration developed market global government bonds [are] This is not a bad situation, especially for central banks which are really linked to inflation,” he said. “If they have to act aggressively, that will help bond investors. And so, adding that international duration… mixing it with some American duration. Now we play on different rate cycles, and it works really well. »
The Fed has not raised rates in the United States since July 2023. The CME Group’s FedWatch gauge As of Friday evening, there is a 78% chance that the Fed will raise rates in December. The odds dropped to 68% in January 2027.
At the same time, Bory highlights the decision taken by the European Central Bank at the beginning of the month. The ECB raised rates by 25 basis points to 2.25% on June 11 — this is the first rate increase since September 2023.
Steve Laipply, Global Co-Head of iShares Fixed Income ETFs at black rockalso sees advantages for investors going abroad. He cites fixed income securities issued in Europe which offer lower risk and higher returns.
“A lot of our clients, a lot of bond investors, [are] very US-centric,” Bory added. “The world is big, you know. The global bond market is huge, and diversifying both your duration, your credit risk, and even your security selection can do… good things for your portfolio.