Central banks face a credibility test as global savings head home

Bond pricing has long rested on growth, inflation and the policy rate. A fourth input now carries similar weight, and it comes from politics rather than economics.

Alessia Berardi, head of global macroeconomics and emerging markets strategy at the Amundi Investment Institute, argues that the arrangement under which global savings flowed into United States Treasuries is breaking down. The term premium built into every long-dated government bond moves with it, and client portfolios holding developed market duration carry the result.

Her forecasts carry an as-at date of 23 September 2026, and the weeks since give advisers a clear read on how the call is travelling.

Six summer moves

Berardi points to six policy events across the northern summer of 2026 that look unrelated on their own. Read together they describe one reorganisation of who buys sovereign debt and why.

Japan’s Finance Ministry encouraged pension funds and households in July 2026 to invest more heavily in domestic assets. It floated placing government bonds inside the tax-free NISA wrapper and began designing retail JGB products. Tokyo wants domestic savings to fund domestic debt, and the timing is pointed because the Bank of Japan is stepping back from the market as inflation becomes more entrenched.

The yen intervention that followed rewards a look at its mechanics. The Bank of Japan ran its largest monthly intervention on record and Washington joined in. The United States Treasury sold euros rather than Treasuries to fund its yen purchases, and Tokyo signalled it could borrow dollars through the Federal Reserve’s FIMA repo facility rather than sell bonds. The operation protected the Treasury market as much as it did the yen.

The Treasury then moved to the long end directly, tripling its long-dated buyback operation from US$2 billion to US$6 billion.

Two reserve managers acted on the same logic from the creditor side. The Dutch central bank shifted 86 tonnes of gold out of New York and Ottawa between March and August 2026, lifting London’s share of the Dutch stock to 32.1 per cent from 18.1 per cent.

Norges Bank Investment Management has proposed cutting the government share of its bond benchmark from 70 per cent to 50 per cent and switching from gross domestic product weighting to market value weighting. Treasury holdings would fall under that design and Japanese bonds would rise. Norway’s Finance Ministry decides in 2027.

“The old model of recycling global savings into US bonds is fading. The term premium has turned into a political variable and is structurally higher.”

Inflation that persists

Waiting for innovation to deliver price stability is not a workable short-term strategy on Berardi’s reading, and nor is waiting for demographics to suppress demand. The investment surge into strategic autonomy collides with physical scarcity, and for critical minerals the binding constraint falls on refining and processing capacity held in very few hands.

Costs climb from the other side as chokepoints and waterways become contested, and that friction feeds straight through to prices. Climate events add to food inflation on top.

Supply shocks become a feature of the environment rather than an interruption to it. For advisers that lifts the expected frequency of inflation surprises and strengthens the case for real assets beside duration.

Forecasts tracking well

The Institute’s rate path runs above market pricing, and the record since late September supports most of it.

The Bank of England raised Bank Rate to 4 per cent on 4 November 2026 in an eight to one vote, with the dissenter preferring a larger move. Berardi had flagged elevated risk of a further hike by year-end.

The Federal Reserve held its target range at 3.75 to 4.00 per cent on 28 October 2026, with two members dissenting in favour of an increase. Futures markets now treat a December rise as the likely outcome, which is where the Institute has been pointing. It expects one further increase of 25 basis points in 2026, then a hold through 2027.

The Bank of Japan held at 1.25 per cent on 30 October 2026 and lifted its 2027 inflation outlook, with the board split over the pace to neutral. Berardi looks for normalisation to continue toward 2 per cent.

The European Central Bank held its deposit rate at 2.50 per cent on 29 October 2026, which leaves the Institute’s call for a further 50 basis points in 2026 resting on the December meeting. Christine Lagarde announced her resignation the same day and steps down on 7 February 2027.

The timing lands on Berardi’s central point. Policy credibility is the live question, and the ECB now meets it through a leadership handover. One or two cuts could follow from mid-2027 if energy-related pressures ease.

The counter-case

The thesis deserves one test. Similar arguments about creditors walking away from Treasuries surfaced after the Standard and Poor’s downgrade of August 2011, and yields fell rather than rose. What separates this sequence is that the changes are being written into mandates and benchmarks rather than expressed through trading. The Norges Bank decision in 2027 settles it.

The adviser read

Central banks tightening by less than markets price, while the identity of the marginal buyer changes, places the risk in the term premium rather than the policy rate. Models built on inflation expectations and duration risk alone understate both its level and its swings.

The term premium is now the part of a long bond that repays the closest watching.