PIMCO explains why higher starting yields and widening economic divergence may make global bonds more useful than domestic-only fixed income portfolios. The paper highlights 10-year government bond yields that reset sharply from 2019 levels, while AI exposure, energy dependence, and emerging market inflation trends are creating more country-level dispersion.
Global Bond Diversification: Higher Yields and New Opportunities for Alpha
PIMCO
Andrew Balls, Pramol Dhawan
Research
8 Pages
Key Takeaways
Yields reset higher: U.S. 10-year government bond yields rose from 1.9% in 2019 to 4.4% in May 2026.
EM yields stand out: Mexico yields rose from 1.2% to 6.1%, while South Africa increased from 4.1% to 5.2%.
AI-energy divergence: Taiwan and Korea show roughly +3.5% AI trade and -4% to -5% net energy imports, while Canada is +4.4% energy-positive.
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