Wellington Asset Management has pulled back from US government debt and moved into German Bunds, a quiet but telling vote of no confidence in the Federal Reserve’s ability to wrangle inflation back to target. The shift came after the Fed’s July 29 meeting, where policymakers held the federal funds rate steady at 3.50% to 3.75% despite core inflation measures still running above the central bank’s 2% goal.
Portfolio manager Martin Harvey, who oversees Wellington’s $6 billion World Bond Fund as part of the firm’s broader $35 billion in assets under management, orchestrated the pivot. The firm has overweighted European bonds, particularly German government debt, while trimming its active exposure to US Treasuries.
Why the Fed meeting spooked bond managers
Core inflation remains stubbornly above the 2% target, and the Fed chose to sit on its hands. Some board members actually dissented, pushing for a rate hike instead. When your own committee members are publicly disagreeing with the call to do nothing while prices keep climbing, it doesn’t exactly inspire confidence in the inflation-fighting playbook.
What this means for global fixed-income markets
