Carmignac Portfolio Global Bond

The main announcement of the month came from the German parliament, which adopted a reform of its debt brake policy in order to increase its military spending while approving the creation of a 500 billion euro infrastructure fund.

In the United States, the indicators have been mixed, with disappointment over the leading indicators, which reflect less dynamic growth prospects and more vigorous inflation.

On the other hand, US economic statistics remain robust, with strong household and business consumption ahead of the implementation of tariffs.

Core inflation fell slightly on both sides of the Atlantic at the end of February, now standing at +2.6% in the euro zone and +3.1% across the Atlantic.

The change in German fiscal policy doctrine resulted in a massive rate shock, as illustrated by the +33bp rise in the German 10-year rate, unlike its US counterpart, which remained stable in view of the uncertainties weighing on growth.

On the currency front, the euro has risen sharply against the dollar, with the market anticipating a negative impact of tariffs on US growth, resulting in a favourable economic growth differential for Europe.

In a context marked by uncertainty regarding tariffs, the budgets allocated to European defence and geopolitical issues, and characterised by increasingly tense valuations in certain markets, we expect the main central banks of developed and emerging countries to gradually continue their monetary easing. Thus, we are maintaining a relatively high level of modified duration.

On the rates, we favour real rates in the United States, because the economic data in a context of the imposition of tariffs indicate a slowdown in the economy. In addition, we are also focusing on central banks that are lagging the cycle, such as the UK, but also on certain emerging countries, such as Brazil, which also benefits from high real rates and an allocation to certain Eastern European countries. We also have short positions on Japanese rates where inflation is starting to take root, but also in Europe, in a context of high budgetary defence spending.

On credit, even if this asset class offers an attractive source of carry, we are cautious due to the high valuations and maintain a significant level of hedging on the iTraxx Xover to protect the portfolio from the risk of widening spreads.

Finally, with regard to currencies, we maintain a relatively low exposure to the US dollar and a limited exposure to emerging market currencies. Our currency selection includes Latin American currencies (BRL, CLP), Eastern European currencies (PLN, CZK, HUF) and a short position on the renminbi. Finally, we are maintaining a long position on the Japanese yen, as it is expected to be the only central bank to raise rates this year.