Schroders Plc has closed its short position in government bonds, citing heightened recession risk. The UK asset manager's shift marks a significant reversal from its previous bearish stance on sovereign debt, reflecting mounting concerns about economic weakness in major markets.

The decision comes as stagflation worries grip financial markets, with investors grappling with the dual challenge of slowing growth and persistent inflation. Government bonds typically outperform during economic downturns, making them attractive safe-haven assets when recession probability rises.

The move by one of Britain's largest asset managers signals how quickly market sentiment can shift. Schroders joins a growing list of institutions adjusting portfolios as the economic outlook deteriorates, potentially marking a turning point in how fund managers approach fixed-income allocation.