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Fund That Dodged Rout Warns ‘Populist’ Policies to Hit Bonds

Greg Ritchie
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⚡ Quantum Brief
A €3 billion bond fund outperformed March’s global debt selloff, posting positive returns by strategically positioning for yield curve steepening amid rising fiscal expansion. The fund anticipates governments will adopt populist, stimulus-heavy policies to mitigate energy shock fallout, driving longer-term yields higher while short-term rates stabilize or fall. Carmignac Portfolio Flexible Bond is buying short-dated securities, betting central banks will pause rate hikes as inflation pressures ease, causing front-end yields to decline. The strategy hinges on unwinding aggressive rate-hike expectations, with managers forecasting a shift toward fiscal dominance over monetary tightening in major economies. Analysts warn the steepening yield curve trend could persist as energy-driven inflation cools, forcing policymakers to prioritize growth over austerity in 2026.
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Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000A bond fund which delivered a positive return during last month’s global debt selloff is betting yield curves will steepen globally as governments pursue expansive fiscal policies to cushion the blow of the energy shock.The €3 billion ($3.5 billion) Carmignac Portfolio Flexible Bond strategy has been buying short-dated securities in the view that yields are poised to fall as bets on interest-rate hikes are unwound.

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Source: Bloomberg Markets

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