British asset management heavyweight Schroders Plc has recently increased its holdings of long-term US Treasuries, betting that yields are nearing a cyclical peak following the latest selloff.

Global Chief Investment Officer Johanna Kyrklund, speaking on the 10-year Treasury note, said that from a valuation standpoint current levels look considerably more attractive than they did previously. Given the recent rise in yields, the firm now considers it appropriate to add duration exposure. As of the end of the second quarter, Schroders managed approximately $1.15 trillion in assets.

Kyrklund revealed in an interview that the company began extending duration over the summer, increased positions further in recent weeks, and has shifted its stance on global bonds from an underweight to a slight overweight. For most of the past several years, the firm had maintained a broadly underweight position on fixed income.

This strategic adjustment arrives as bond yields across major global markets climb to multi-year highs. Expectations for further Federal Reserve rate hikes have intensified amid elevated crude oil prices and growing inflation concerns. The 10-year Treasury yield briefly touched roughly 4.82% on Wednesday, marking its highest level since 2023.

Kyrklund said the firm judges current levels to be near the top of the yield range. The 4.80% to 5% area presents buying value, and she expects a tradeable rally could follow, with yields potentially retreating toward 4.5%.

Despite this view, many fund managers remain cautious on long-duration bonds. Investors, increasingly worried about fiscal credibility and policy risks, are demanding a higher term premium. The market widely anticipates another rate increase from the Fed this month. Kyrklund contends that if the Fed does hike, such a move is already fully priced in. Should inflation data come in soft and the Fed unexpectedly hold steady, the bond market would likely see a significant rally.