Amundi Buys 2-Year U.S. Treasuries, Betting High Oil Prices Will Weigh on U.S. Economy

Amundi has begun gradually purchasing 2-year U.S. Treasury bonds and has closed its previous short positions on U.S. short-term interest rates. The firm manages approximately $2.8 trillion in assets, and portfolio manager Nicolas Dahan believes that rising oil prices and soaring financing costs have increased the risk of an economic slowdown in the U.S. Recently, the global bond market has faced a sell-off, with the yield on 2-year U.S. Treasuries briefly surpassing 4.50%. The yield on 10-year Treasuries surged by 19 basis points last week and approached the 5% mark on Monday. Brent crude oil has surpassed $100 per barrel, and the European Central Bank's interest rate hikes have pushed the yield on German 10-year bonds to its highest level since 2009. Dahan stated that when the yield on 2-year U.S. Treasuries rises above 4.50%, its appeal as a safe-haven asset significantly increases. Amundi is gradually reallocating bonds in mature markets such as the U.S., Europe, and the UK, while extending the duration of its investment portfolio. Dahan believes that disruptions in crude oil supply, aggressive pricing of central bank tightening paths by the market, and the recent sell-off in the bond market could serve as catalysts for a market turnaround, with major central banks potentially nearing a policy inflection point.

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