Carmignac Portfolio Global Bond

• Strong data in the United States supported the markets. Second-quarter GDP rebounded more than expected to +3.0%, while core PCE inflation rose +0.3% month-on-month.• The U.S. Congress approved the Trump administration’s budget plan, “One Big Beautiful Bill.” This costly tax reform is expected to drive the U.S. annual deficit to a threshold of 7% of GDP over the next decade. The implementation of tariffs should partially offset this additional cost, particularly after trade agreements were signed in July with certain Asian countries and members of the Eurozone.
• At the same time, the US Federal Reserve kept its rates unchanged at 4.25–4.50% for the fifth consecutive meeting, reaffirming its cautious “wait-and-see” stance and showing no urgency to proceed with further rate cuts.
• The European Central Bank paused its easing cycle after eight consecutive rate cuts, keeping the deposit rate at 2.0%. The growth outlook for the eurozone rose to an 11-month high, with leading PMI indicators in expansionary territory.
• Rates rose in July on the back of resilient growth prospects on both sides of the Atlantic. The US 10-year rate rose by +15 bp and its German counterpart by +9 bp.
• July marked the return of American exceptionalism, which had been weakened during much of the first half of the year, thanks to a trade policy meeting its objectives, solid economic data, and strong corporate earnings, allowing the dollar to record its best monthly gain since 2022.

• During the month, the fund delivered a positive performance, underperforming its benchmark.• In this rising interest rate environment, the contribution of our local rate strategies was broadly negative. The fund was impacted by our long positions in US, German and UK rates, but benefited from our short positions in French debt.
• In credit, our bond selection in our preferred sectors, such as finance and energy, as well as our selection of emerging market debt denominated in hard currencies, made a positive contribution. However, this was slightly offset by the protections we put in place to reduce our exposure to this market amid tightening credit spreads.
• Finally, in terms of currencies, the Fund benefited from the rebound in the US dollar at the end of the period, which contributed positively to performance.

• Against a backdrop of uncertainty linked to the impact of customs tariffs, geopolitical tensions and the risk of fiscal slippage in certain countries, we anticipate that the major central banks in developed and emerging countries will maintain an accommodative stance. In this context, we are therefore maintaining a relatively high level of modified duration, around 5.• Regarding interest rates, we are maintaining a long position on US rates, anticipating that the Fed will resume its rate cuts in response to the slowdown in the labour market. We are also positioned for higher UK rates, given the deterioration in economic data. Conversely, we are taking short positions on French rates, where the outlook, particularly on the fiscal front, does not justify the yield spreads observed with Germany, and on Japanese rates, where the inflation outlook has been revised upwards. Finally, we remain selective on emerging market local rates, which are benefiting from high real rates, as in Brazil, but also in some Eastern European countries.
• On credit, we are maintaining significant exposure, benefiting from an attractive carry source. However, given the relatively high valuations, we remain cautious and are maintaining a high level of hedging on the iTraxx Xover to protect the portfolio from the risk of widening spreads
• Finally, in terms of currencies, we have increased our exposure to the US dollar from an initially low level, in an environment that has become more favourable in the United States.
• Our currency selection includes Latin American currencies (the Brazilian real and Chilean peso) and commodity-linked currencies (the Australian dollar, Canadian dollar and Norwegian krone). Finally, we are maintaining a long position on the Japanese yen, as the Bank of Japan is likely to be the only central bank to raise rates this year.