Recent financial news indicates that global fixed income manager James Ringer of Schroders has been underweight US Treasuries for much of the past year. This stance was based on expectations of persistent inflation, supportive fiscal policy for growth, and a tight US labor market due to a declining worker supply. While Ringer's conviction has softened slightly, and he is no longer outright bearish after valuations improved, he still prefers to express positive duration views in other markets such as Australia and Canada.
Further reports reinforce this position, with Schroders Plc, which manages $1.1 trillion, reportedly increasing its bearish Treasury positions. Instead of US Treasuries, Schroders is buying front-end government bonds in Australia, the UK, and the eurozone. The firm is betting that front-end yields in these non-US markets will fall, and they are specifically shorting US five- and 10-year Treasuries.
This approach aligns with a broader trend among managers who are cautious on the long end of the US Treasury curve. Many are limiting their US Treasury duration exposure due to mounting uncertainty over US debt, a growing pile of government debt, and competition for capital from AI-related borrowing. Thirty-year US Treasury yields touched 5.3% in August, their highest level since 2007, reflecting these pressures. Investment teams generally agree that persistently elevated real yields in the US reinforce the value of a diversified global fixed income approach, leading many to other developed markets.
