Bond

Trump’s re-election and a resilient economic outlook for 2025 have pushed sovereign yields higher, with the 10-year Treasury yield testing resistance at 4.4%. Stronger-than-expected growth could keep yields elevated and volatile.

Long-duration Treasury yields, especially the 30-year and 10-year, are rising sharply in response to expectations of inflationary policies under Trump, such as tax cuts and increased spending. This has created a pronounced steepening in the yield curve.

With our base case of a soft landing, short rates are likely to be biased lower given declining policy rates, reducing the appeal of cash-like instruments.

Gilt yields surged to 1-year highs as UK fiscal concerns mount, while stocks endured a chunky tech-led sell-off on Thursday. Today, the October US labour market report stands as the calendar highlight.

Company bond sales are also expected to surge in 2025, according to Goldman Sachs Global Banking & Markets.

While the "Trump Trade" can be negative for duration due to higher inflation and slower rate cuts, it may benefit the dollar and corporate bonds, especially in pro-growth sectors like energy and finance.

The Portfolio Construction and Strategy Team compares active ETFs and mutual funds, highlighting the benefits of both and flagging the key questions investors need to ask.

The Autumn Budget, to be delivered by Chancellor Rachel Reeves on October 30, is the Labour Government's first budget in nearly 15 years.

The U.S. dollar has recently surged to new highs.