Charles Younes, Deputy Chief Investment Officer at FE fundinfo, has shared his thoughts on the US bond sell off. He discusses how investors can pivot, and what it means for Europe.
“We recently moved from an Overweight to an Underweight position on US Equities, and the latest market developments have reinforced that decision. The equity sell-off has now extended into the bond market, with US Treasuries selling off overnight and the US Dollar also under pressure.
“US assets — long viewed as global safe havens — are now being repriced as sentiment deteriorates. This is not about fundamentals, which remain broadly intact, but about rising uncertainty and diminished visibility. Investors are increasingly demanding a premium to hold US-based assets.
“What we’re witnessing may mark the beginning of a broader reallocation away from US exceptionalism, as capital rotates globally. In this environment, we believe a more defensive posture is not only prudent but necessary.
There is also a clear risk that this repricing spreads to Europe. In a globally connected market, shifts in sentiment rarely stay contained. For Europe, the uncertainty is compounded by geopolitical risks, including the unresolved question of future trade relations with the Trump administration. At this stage, it’s unclear whether Europe will face renewed trade tensions or secure a deal, and that lack of clarity could weigh on sentiment and capital flows across the region.”
