Investors need to brace for a higher-rate world

[SINGAPORE] US Treasuries are supposed to be the safest among sovereign bonds. The 10-year Treasury note is widely used as the risk-free benchmark by which the risk of all other assets are measured.

But in the light of the recent rise in yields, investors may well feel the bonds are more volatile and risky than they’ve bargained for.

Bonds are typically seen as the conservative allocation in portfolios, a stabiliser against equity volatility. But in the past few weeks, Treasury yields have climbed, roiled by the ongoing Iran war, higher oil prices and uncertainty over whether the US Federal Reserve is behind the curve in getting inflation under control.