George Bory, chief investment strategist at Allspring Global Investments, suggests that bond markets outside the U.S., particularly in the UK, Europe, and Australia, are becoming more attractive due to rising interest rates and differing inflation dynamics. He notes that the European Central Bank recently raised rates by 25 basis points to 2.25%, marking its first hike since September 2023.
Bory emphasizes the importance of diversifying bond investments internationally, as many U.S.-centric investors may be missing out on opportunities in the global bond market. He advocates for a mix of short to intermediate duration global government bonds, which could benefit from aggressive central bank actions tied to inflation.
The Federal Reserve has not raised rates since July 2023, with a 78% chance of a hike in December 2026, indicating a slower pace compared to other central banks. Steve Laipply from BlackRock also supports this view, highlighting the potential for lower risk and higher yields in European fixed-income securities.
Overall, diversifying bond portfolios can enhance returns and mitigate risks in a changing interest rate environment