Wellington Asset Sells US Treasuries for German Bonds Amid Inflation Fears

Wellington Asset Management has shifted its investment strategy away from US Treasuries and into German Bunds, reflecting growing doubts about the Federal Reserve's ability to control inflation. The move came after the Fed's July 29 meeting, where policymakers left interest rates steady at 3.50% to 3.75%, despite core inflation measures still above the central bank's 2% target.

The firm has overweighted European bonds, particularly German government debt, while trimming its active exposure to US Treasuries. Portfolio manager Martin Harvey oversees Wellington's $6 billion World Bond Fund as part of the firm's broader $35 billion in assets under management.

The Fed's decision to sit on its hands despite core inflation remaining above target has raised concerns about the central bank's ability to wrangle prices back down. Some board members even dissented, pushing for a rate hike instead.