Gold Silver Reports (GSR) – The ultra-long bonds are seen as a hedge to protect the portfolios of AMP Capital Investors Ltd. against the risks stemming from the U.S.-China trade frictions and less-synchronized global growth, according to Ilan Dekell, the head of macro for global fixed income at the asset manager.
“Six weeks ago, we started increasing our duration in the 30-year part of the curve,” Sydney-based Dekell said in an interview in Sydney. “It gives us a bit of protection. I can’t forecast the trade war.”
AMP Capital is also betting on a long dollar position against a basket of emerging-market currencies that have been sold off amid tightening liquidity in the greenback, he said.
The strategy means AMP Capital join the ranks of fund managers such as Goldman Sachs Asset Management and QIC Ltd. that are looking for protection as the trade war between the world’s two largest economies escalates. Pacific Investment Management Co. sees value in safe haven Treasuries “if things get worse,” while Morgan Stanley has called a peak in the 10-year U.S. yield as trade concerns and a stronger dollar curb its advance.
The yield on U.S. government bonds maturing in 30 years was at 2.95 percent Friday, down from 3.26 percent mid-May, which was the highest level since September 2014. The S&P 30-Year U.S. Treasury Bond Futures Total Return Index has risen about 4 percent in the period.
“The best is probably behind us,” Dekell said Thursday, alluding to the environment of rising global growth and benign inflation seen earlier this year. “The trade war adds to our concerns — our book overall is very conservative.” – Neal Bhai Reports