Investors seeking to insulate their portfolios against turbulence should increasingly look beyond government bonds, which appear to be losing their traditional safe-haven status, according to Standard Bank’s head of G10 strategy.
Steven Barrow wrote in a note on Monday that more investors could follow the example of Australian asset manager AMP, which said last week it was scaling back government bond holdings amid evidence the securities are no longer acting like safe assets.
Should the trend gather momentum, it could present funding challenges for governments, he said.
Barrow pointed out that bond prices fell alongside stocks and other risky assets during recent bouts of market stress, including the Middle East war, instead of rallying as a safe asset would typically do.
In addition, yields on longer-dated bonds continued to rise even when central banks cut interest rates following the 2022 inflation peak, he noted.
That’s a highly unusual development which
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