US Treasury Yields Soar: Managers Flee Long End, Seek Haven in Developed Markets

Thirty-year US Treasury yields have risen to their highest level since 2007, reaching 5.3% in August. Despite the Treasury's efforts to calm the market by doubling its long-end bond buybacks, yields rebounded within hours.

Market experts warn that the pressures behind this move, from the growing pile of government debt to competition for capital from AI-related borrowing, aren't going away anytime soon. As a result, many fixed income managers are taking a cautious approach to their US Treasury holdings.

Harvey Bradley, head of global rates investment at BNY Insight Investment, is overweight at the front end of the curve and underweight on the long end, while Guillaume Rigeade, co-head of fixed income at Carmignac, expects the yield curve to steepen further due to underlying fundamentals. James Ringer, global fixed income manager at Schroders, has softened his conviction that inflation will remain above target and fiscal policy will continue to support growth.

Managers are looking beyond the US for shorter duration opportunities, with Australian government bonds standing out as a potential haven. Adam Marden, co-manager of T. Rowe Price Dynamic Global Bond, likes UK and New Zealand government bonds due to their more compelling duration opportunities.