Bond Summit Flags 3% Inflation Regime as Hedge Funds Take Up to 50% of New Deals

1 articles · Updated · Financial Times · Jun 17

London’s FT Global Bond Summit opened with investors arguing central banks may be drifting into a 3% inflation world, with Fidelity’s Salman Ahmed saying “three is the new two.”
Market evidence cited at the event showed US five-year forward inflation expectations at 2.4%, while speakers said inflation pressures remain structural even after tentative US-Iran de-escalation eased energy-supply fears.
Debt officials from the UK, Germany, Italy, Canada and the EU said hedge funds now absorb a much larger share of sovereign issuance; Canada said they can take 30% to 50% of a new deal.
The same officials also described “de-treasurisation” rather than a Treasury dump, with investors seeking dollar exposure through other sovereign issuers as EU deals drew 28% Asian participation and 18% Middle East demand.

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Is the world's diversification from US Treasuries a quiet financial shift or the start of the dollar's dethronement?

With hedge funds now buying half of new government bonds, who truly holds the power over national economies?

As experts claim 'three is the new two,' are central banks quietly accepting a future of permanently higher inflation?

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