Carmignac Portfolio Flexible Bond

• April was marked by high volatility and renewed risk aversion on the bond and equity markets. The Trump administration's announcement of new tariffs reignited fears of a recession in the US and disruptions to global production chains.- Despite Donald Trump's backtracking on the main tariff measures (temporarily reduced to 10%, except for China), a crisis of confidence took hold among investors, who deserted US assets (the dollar and Treasury bonds).
• In the US, the yield curve steepened, with the 2-year rate falling by -28 basis points compared with -5 basis points for the 10-year rate, as the market now anticipates four rate cuts by the Federal Reserve between now and the end of the year.
• The picture was the same in the eurozone, where the German 2-year rate fell by -36 basis points compared with -29 basis points for the 10-year rate, completely erasing the previous month's correction linked to the announcement of investment plans in Germany.
• Risk aversion was high in April following the introduction of tariffs, which led to a +100 bp widening on the Itraxx Xover index at the beginning of the month, before tightening just as sharply after the Trump administration's reversal. As a result, the Itraxx Xover index recorded only a moderate widening of +22bp over the month.

-In an environment marked by risk aversion, the portfolio delivered a positive absolute performance.-Our exposure to emerging market rates, particularly Brazil, was the best contributor to the fund's performance.
-Our yield curve steepening strategies also contributed positively to the fund's performance, and we reduced these during the month given the current valuations of short-term rates.

• During March, we reduced the fund's modified duration following the Liberation Day announcements, while partially taking profits on our credit protection after the massive widening of credit spreads.

-The current environment is fraught with uncertainty stemming from the Trump administration's decisions, which could result in increased volatility for risky assets.-The market appears pessimistic about the economic outlook for developed countries, pricing in significant rate cuts on both sides of the Atlantic.
-Disinflationary momentum appears less robust on both sides of the Atlantic, while the market continues to price in a return of inflation below central banks' targets on a sustained basis.
-Based on these observations, we are starting with low sensitivity to rates while maintaining a strong appetite for inflation products.