Time to refocus on bonds - Rethinking portfolios after the great repricing

Friday 30 September 2022

Investment Talks, Amundi Institute

Higher yields: current levels have become attractive; being invested in fixed income is paying off once more.
More diversification: negative correlation between bonds and equities may return in a more uncertain economic environment, making bonds more appealing as a portfolio diversifier.
A macro hedge in the case of increased risk of Eurozone fragmentation or political uncertainty, bonds could provide some portfolio protection. This would also be the case if aggressive tightening by the Fed prompts a recession (and the Fed has shown its commitment to do whatever it takes to fight inflation).

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Inflation has risen to levels not seen in 40 years, leading to a repricing of financial markets this year, which has been particularly severe in the fixed income space.