Jupiter Asset Management's $1.2 billion Dynamic Bond fund has completely divested from US Treasuries, holding no US government debt for the first time in its 15-year history. This move, reported by Bloomberg on July 9, 2026, reflects the fund managers' increasing concern that the Federal Reserve will not be able to cut interest rates in the near future and that inflation in the US economy will continue to rise.
Fund managers Mark Nash and Huw Davies cited the ongoing war, which they believe is underpinning persistent inflation, as a key reason for the decision. They noted the significant impact of the conflict on energy prices and its ripple effects across the broader economy. This has led them to conclude that the Fed faces a challenging environment to enact rate cuts, an expectation that has shifted significantly since earlier in the year when many investors anticipated multiple cuts.
The fund has reallocated its investments into European government bonds, particularly those from Germany, which they perceive as offering better value and less exposure to the inflationary pressures seen in the US. The managers believe that the European Central Bank may have more room to maneuver on interest rates compared to the Fed, making European bonds a more attractive option for their portfolio. This strategic shift underscores a broader sentiment among some investors that the US bond market, particularly Treasuries, is becoming less appealing due to the current economic outlook and policy challenges.
The broader market context includes US Treasuries experiencing significant volatility. A Bloomberg gauge of their performance turned negative for the year by mid-March 2026, losing 1.7% in that month alone, as inflationary fears intensified. April 2026 saw further declines in Treasuries following sticky inflation data, eroding earlier bets on Fed rate cuts. By May 2026, rising gasoline and grocery costs pushed 30-year Treasury yields close to their highest in almost a year, with 10-year yields also surging, reinforcing the view that rate cuts were off the table and potential future hikes were a possibility.
