Australian duration was increased given attractive value at yields near 5% and its potential to outperform if domestic growth slows, while global duration was also increased as AUD-hedged global fixed income now offers a compelling all-in yield of around 5.5%. Although inflation volatility and fiscal discipline remain risks, current yields provide fair compensation, supporting a move closer to neutral.

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AB Global Dynamic Fixed Income was trimmed and PIMCO Global Bond was increased to take advantage of more attractive yields now available in global bonds. Bond yields have risen as markets expect fewer US rate cuts and the possibility of further rate increases in some regions, meaning investors are now being better compensated for holding global fixed income. While inflation and interest rate risks remain, current yields provide a more attractive entry point and support a measured increase in global bond exposure.