Here’s the bond-market alternative as U.S. and other developed markets debt deteriorate

Christopher Wood of Jefferies argues that Group of Seven government bonds have entered a "structural bear market" dating back to March 2020, when yields bottomed and prices peaked. In practical terms, that means the long era in which developed-market sovereign debt reliably cushioned equity drawdowns may be over, at least for now. When bond prices fall while stocks also struggle, the traditional diversification benefit weakens, and investors holding core fixed income can face losses on what was once considered the safe part of a portfolio.

The bond-market alternative Wood highlights is a shift in emphasis rather than a single asset: exposure to markets and instruments less tethered to G7 duration risk, such as Asian or emerging-market equities and bonds, gold, and other real assets. The logic is that if developed-market debt is repricing around inflation, deficits and supply, investors may look elsewhere for income and ballast.

What to watch: whether G7 yields keep grinding higher, whether inflation expectations stay elevated, and whether correlations between stocks and bonds remain positive. Those signals determine how durable this rotation proves.