US and local bond yields are hitting multi-year highs. Why is it happening and what’s next?

Resilience in the US economy is the main factor, says Pendal’s head of bond strategies Tim Hext.

That’s due to the dominance of fixed-rate loans there and Joe Biden's big-spending government.

Meanwhile the Australian economy is holding up better than expected and the fixed-rate cliff hasn’t impacted as much as people thought.

Bond investors should reward investors in two ways, argues Tim: the return and the insurance role.

“If things were to get out of hand, if you get a collapse in equities, if you see major geopolitical disruptions in this heightened risk environment, then bonds should perform their defensive role. I do think they’re cheap insurance.”

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Find out more about Pendal's fixed income strategies at pend.al/fixedinterest

Pendal is a global asset manager. Find out more at pendalgroup.com

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