world-economy

Global Bond Markets Offer Better Returns as Central Banks Tighten Policy

Investment strategists are directing capital toward international government bonds as central banks outside the United States raise interest rates. Allspring Global Investments' chief investment strategist in fixed income recommends short to intermediate duration bonds from developed markets with inflation-focused monetary policies. The European Central Bank raised rates 25 basis points to 2.25% in June, with expectations for further increases. The UK and Australia have seen material increases in central bank tightening expectations. BlackRock's global co-head of fixed income ETFs highlights European fixed-income securities offering lower risk and higher yields compared to U.S. alternatives. Diversifying across different rate cycles through international exposure provides portfolio benefits. This strategy appeals to institutional investors as the Federal Reserve's rate trajectory remains uncertain.