Investors are revisiting one of last year’s most popular bond trades as simmering geopolitical tensions and deficit worries spark fresh weakness in long-dated debt. The renewed focus on duration risk follows a period of relative calm in markets.

The backdrop involves heightened U.S.-China friction over Arctic resources and growing fiscal concerns in major economies. This environment historically pushes capital into shorter-term instruments, reversing the steepening yield curve trades that were profitable in 2023.

Market participants are now assessing whether this is a temporary shift or the start of a longer-term unwind. The move has implications for pension funds and insurers with significant long-duration liabilities, forcing a reevaluation of portfolio positioning.