In theory, the reform of the Dutch pension system from defined benefits to a defined contribution could be a shadow hanging over the longer end of European interest rate curves. But even there, we have known for numerous years that this reform was going to happen. Over those years, this reform has been used as an easy explanation for interest rate moves, especially when no other clear catalyst was available.

Recent policy developments in the United States, particularly those related to inflation and long-term debt sustainability, have brought significant implications for global fixed income markets. With the fiscal outlook becoming increasingly strained, it is an interesting moment to assess how markets are reacting and how investors should position themselves in the current environment.

The US government, like in many other countries, has a significant amount of debt outstanding. This debt is financed for the majority through the issuance of Treasury securities, which include Treasury bills (short-term), Treasury notes (medium-term), and Treasury bonds (long-term), and these securities serve as key instruments in financial markets. The investors include individuals, corporations, pension funds, the Federal Reserve, and other governments. Broadly, this is referred to the debt held by the public.