In the face of these developments, bond yields are rising on both sides of the Atlantic.
The US 10-year rate, which ended 2023 at less than 3.9%, is around 4.15%. This increase of about a quarter of a percentage point is in line with what is happening in Europe where, at the same time, the German ten years went from 2.0% to 2.3%, French from 2.5% to 2.8% and Italian from 3.7% to 3.9% (Spanish from 3.0% to 3.25%, Belgian from 2.6% to 2.9%, and Portuguese from 2.75% to 3.0%).
At such levels, bond markets are attractive, especially the US market. US debt combines higher yields in absolute terms (and favourable in real terms since it exceeds inflation) and lower risks on price growth.
The country is largely self-sufficient in its energy supply and significantly less exposed to Ukraine and the Middle East conflicts than Europe. It also adopts a very pragmatic policy regarding energy transition, promoting the development of new technologies without neglecting the production of hydrocarbons (American oil production was an absolute record in 2023).
We keep U.S. bonds in all our portfolios: In the balanced portfolio, investments of 15 per cent in US bonds and a further 5 per cent in US high yield, for 20 per cent.