- Euro fixed income yields have reached levels not seen in over a decade, potentially providing both a stronger buffer against rising interest rates and the chance for better long-term returns
- While volatility remains high, an active and agile approach to duration management can contribute to mitigating risk and enhancing performance
- Given current geopolitical and fiscal uncertainties, we believe a flexible allocation across asset classes – including credit, inflation-linked debt, and sovereign bonds – is beneficial
By Johann Plé, Senior Portfolio Manager, Fixed Income and Rui Li, Portfolio Manager, Fixed Income
Europe’s fixed income landscape has undergone significant changes in recent years and become a segment difficult to ignore within the global bond universe.
While recent market volatility has sent yields higher – 10-year German bonds are at multi-year highs – we believe this represents a significant opportunity.
Yet these valuations have not been reached by accident. Rising geopolitical risks and subsequent energy shocks have weighed on inflation and central banks’ monetary policies.
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