Amundi, Europe’s largest asset manager, has started building positions in 2-year U.S. Treasuries while closing out earlier bearish bets on the front end of the U.S. rates curve, according to BlockBeats. The firm, which manages about $2.8 trillion in assets, said higher oil prices and sharply rising financing costs are increasing the risk of a slowdown in the U.S. economy. Portfolio manager Nicolas Dahan said the appeal of 2-year Treasuries as a defensive asset has improved after yields moved above 4.50%. His comments come after a broad sell-off in global bond markets pushed the 2-year U.S. Treasury yield above 4.50% and lifted the 10-year yield by 19 basis points last week, leaving it still close to the 5% mark on Monday. At the same time, Brent crude rose above $100 a barrel, while a European Central Bank rate increase helped drive Germany’s 10-year government bond yield to its highest level since 2009. Amundi is also reallocating into core bonds across the U.S., Europe and the U.K. and extending portfolio duration.
Amundi, Europe’s largest asset manager, is gradually buying 2-year U.S. Treasuries and has begun closing its earlier bearish positions on short-dated U.S. rates, according to BlockBeats on Sept. 14.
The firm manages about $2.8 trillion in assets. Portfolio manager Nicolas Dahan said rising oil prices and surging financing costs are increasing the risk of a slowdown in the U.S. economy.
Global bond markets have recently been hit by a sell-off. The 2-year U.S. Treasury yield briefly moved above 4.50%, while the 10-year yield jumped 19 basis points last week and remained close to the 5% mark on Monday. Brent crude also climbed above $100 a barrel. In Europe, the European Central Bank’s rate hike pushed Germany’s 10-year government bond yield to its highest level since 2009.
Dahan said 2-year Treasuries became noticeably more attractive as a defensive asset once yields rose above 4.50%. With yields on core bonds in developed markets reaching more attractive levels, Amundi is gradually reallocating into bonds across the U.S., Europe and the U.K. and extending portfolio duration.
He added that an oil supply shock, aggressive market pricing of central bank tightening paths and the recent capitulation-style sell-off in bond markets could all act as catalysts for a turn in markets. His view is that, as economic pressure builds, major central banks may not be far from a policy turning point.
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