Allspring sees opportunity to add duration as inflation pressures begin to abate

• The Federal Reserve is expected to remain on hold for the next 3-6 months, awaiting significant drops in oil prices, broader commodity prices, and softness in the labor market before considering rate cuts.
• Higher bond yields, driven by oil prices and inflation worries, create an opportunity to add duration to bond portfolios, especially in the front and intermediate parts of the curve, as these inflationary pressures are unlikely to persist.
• Emerging markets, particularly countries and companies tied to energy, commodities, and food production (e.g., Brazil), offer attractive opportunities due to their profitability in the current global growth environment.

Allspring Global Investments anticipates the Federal Reserve will maintain a 'wait and see' stance due to inflation and geopolitical risks. Despite this, the current environment of higher bond yields presents a strategic opportunity to add duration to portfolios, focusing on sectors like energy, commodities, and food, particularly in emerging markets.