Amundi buys two-year US Treasuries to hedge against growth slowdown

When the world’s largest asset managers start hoarding the safest, shortest-duration government debt they can find, it’s worth paying attention. Amundi SA, which oversees roughly €2.58 trillion in assets, is doing exactly that, snapping up two-year US Treasuries as a defensive play against the risk that elevated oil prices drag the global economy into a slowdown.

The move comes after a sharp selloff rattled bond markets in early September, driven by oil prices surging to a four-month high amid escalating tensions in the Middle East. For Amundi, the playbook is familiar: when geopolitical shocks spike volatility, park capital in bonds that mature quickly and carry less interest-rate risk.

Why two-year Treasuries, and why now

Amundi’s Group CIO Vincent Mortier flagged the firm’s appetite for one- to two-year bonds back in April, describing “significant additions” to those maturities. The September selloff, which saw two-year Treasury yields spike as oil-driven inflation fears collided with growth concerns, appears to have offered the kind of entry point the firm was waiting for.

Rising oil prices act like a tax on consumers and businesses alike, eroding spending power and squeezing margins. If that dynamic persists long enough, economic growth slows. And when growth slows, central banks eventually cut rates, which sends bond prices higher. Buying short-dated Treasuries now is essentially a bet that the economy weakens before inflation reignites, a scenario where those bonds would appreciate as yields fall.

The oil-growth feedback loop

Oil’s recent price surge traces directly to heightened geopolitical tensions in the Middle East. For bond investors, this creates a tricky dual mandate. Higher oil prices stoke inflation expectations, which normally push bond yields up (and prices down). But they simultaneously threaten growth, which pulls yields down as investors seek safety.

Amundi appears to be betting that the growth headwind will ultimately dominate. By concentrating in the two-year part of the curve rather than longer maturities, the firm limits its exposure to the inflation side of the equation while positioning for rate cuts that would follow an economic deceleration.

What this signals for the broader market

When a firm managing €2.58 trillion in assets shifts its positioning, it tells you something about institutional sentiment. The firm has experienced notable net inflows into its fixed-income strategies during the current period of market volatility, suggesting that a broader swath of investors shares this cautious outlook.

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