Flash Fixed Income

Softer US economic data means the pressures on UST yields now look more balanced, but headlines around President Trump’s pick for the next Fed chair are just one reason investors should expect rates volatility to continue.

The question for investors now is how much of the macro risk remains, and how well that risk is being reflected in asset valuations.

After a chaotic week in global markets following the tariffs announced by President Trump on April 2, at time of writing (April 10) investors are left to contemplate 125% tariffs on China, a baseline 10% on the rest of the world, 25% on auto imports and a 90-day pause on more punitive rates.

The incoming German government’s removal of the country’s infamous “debt brake” is a serious pivot for the typically fiscally conservative country, and one that we think highlights the value on offer in European assets.

Since the Federal Reserve first cut interest rates in September, we have seen the most aggressive rise in US Treasury yields of any cutting cycle over the past 40 years.

Will volatility in government bonds continue? Has fixed income seen “peak ESG”? And what will be the biggest driver of returns?