Raj Manon

We see compelling value in US Treasuries and have increased our exposure to global government bonds.

US President Donald Trump’s trade tariff announcements caused considerable concern about resurgent inflation. However, many of the country’s trade partners are now engaged in talks with Washington and this is likely to ease pressure on prices.

At the same time, the US administration is signalling a strong wish to see lower interest rates. While the US Federal Reserve is adopting a cautious approach, we believe the central bank’s tone is softening and this suggests rate cuts are likely later this year. Historically, lower interest rates tend to lead to capital appreciation for government bonds.

Meanwhile, we have reduced our exposure to corporate bonds, which we do not believe offer sufficient extra yield relative to government bonds to compensate for the additional risk.

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