Amundi SA, Europe’s largest asset manager with $2.8 trillion in assets, is gradually buying two-year U.S. Treasuries and unwinding short positions at the front end of the U.S. yield curve. Nicolas Dahan, the firm’s senior portfolio manager for global bonds and currencies, said yields above 4.50% have made the securities attractive as a hedge against an oil-driven slowdown and possible limits to the Federal Reserve’s tightening cycle. Brent crude futures rose above $100 a barrel amid Middle East conflict, while two-year Treasury yields reached their highest level since 2024. The 10-year yield rose 19 basis points last week and stood at 4.96% on Monday, near the 5% threshold. European bonds have also sold off, with German 10-year bund yields reaching their highest level since 2009 as the European Central Bank continues raising rates. Amundi is returning to developed-market core bonds after favoring emerging markets with higher real rates and stronger fundamentals, while gradually extending portfolio duration. Markets remain divided over whether the Federal Reserve is behind the curve on inflation or nearing the end of its tightening cycle.