Investment strategists at Allspring Global Investments and BlackRock are urging investors to look beyond the United States for bond exposure, arguing that overseas government and fixed-income markets may offer attractive opportunities as global interest-rate cycles diverge. George Bory, Allspring’s chief investment strategist in fixed income, said markets in the UK, Europe and Australia have already priced in significant inflation-related tightening expectations, creating what he described as a potentially favorable setup for bond investors.
Bory said short- to intermediate-duration government bonds in developed international markets could be appealing, particularly in countries where central banks remain closely focused on inflation. He argued that combining international bond duration with U.S. exposure can help investors benefit from differing monetary policy paths. Bory also said many investors remain overly concentrated in U.S. assets despite the size and breadth of the global bond market.
The backdrop for that view includes contrasting central-bank actions. The Federal Reserve has not raised rates in the United States since July 2023. CME Group’s FedWatch gauge, cited late Friday, showed a 78% chance of a Fed rate hike in December, with those odds falling to 68% by January 2027. In Europe, the European Central Bank raised rates by 25 basis points to 2.25% on June 11, its first increase since September 2023.
Steve Laipply, global co-head of iShares Fixed Income ETFs at BlackRock, also said investors may find advantages abroad, pointing to European fixed-income securities that he said offer lower risk and higher yields. The materials did not include a substantive opposing investment case against shifting bond allocations overseas, but the recommendations presented hinge on expectations about future inflation trends and how central banks in different regions respond. Those outlooks remain central to the argument for greater international diversification in fixed-income portfolios.