Fund Manager Predicts Populist Policies Will Impact Bond Markets

A bond fund that managed to achieve positive returns during last month's global bond sell-off is betting that global yield curves will steepen as governments adopt expansionary fiscal policies to mitigate the impact of the energy shock. Fund managers believe such 'populist' policies will increase borrowing costs, putting upward pressure on long-term bond yields. Budget support packages implemented in response to rising energy prices are expected to boost government bond supply and raise inflation expectations. This situation could lead to pressure on bond prices, particularly long-term ones, and a reshaping of yield curves. The fund states that it has positioned its portfolio to benefit from a steepening yield curve in line with this expectation. This is not investment advice.