Wellington Asset Management Shifts Billions From US Treasuries to German Bonds

Wellington Asset Management Ltd reduced its exposure to US Treasuries and shifted assets into European bonds, specifically German debt. Martin Harvey, a portfolio manager overseeing $35 billion, pivoted the $6 billion World Bond Fund to overweight positions in Germany following a Federal Reserve meeting that raised doubts about the US central bank's ability to combat inflation.

Harvey characterized longer-dated German debt as the most credible option in global government bond markets. He cited the European Central Bank's more effective response to inflation compared to Federal Reserve Chairman Kevin Warsh. This strategic shift occurred as the term premium on 30-year US Treasuries reached its highest level since 2013.

Despite Germany increasing borrowing for a €500 billion infrastructure and defense program, Harvey views Berlin's fiscal credentials as stronger than those of the United States.