A number of U.S. bond managers at firms in charge of trillions of dollars of assets are steering clear of long-term U.S. government bonds as they expect fiscal worries to spur periodic bouts of volatility.
Long-term U.S. Treasury yields, which move inversely to prices, briefly rose on inflationary and fiscal concerns in the aftermath of U.S. President Biden’s disastrous TV debate last month and after last weekend’s assassination attempt on former President Donald Trump, which increased expectations that Trump could regain the White House.
Bond investors sold long-term Treasuries as they fretted about Trump’s trade and economic policies that could, over time, boost inflation and U.S. debt levels. Trump’s team has said his pro-growth policies would bring down interest rates and shrink deficits. Many market participants believe deficits will keep deteriorating under a second Biden administration as well.
While yields subsequently…
