Local bond managers are betting that US President Donald Trump’s next round of tariffs has a good chance of derailing the global economy, prompting a sharp fall in interest rates and boosting returns for their fixed-income investments.

Investors in Australian government bonds have largely been shielded from the turmoil that’s erased trillions of dollars from global equity markets. While the S&P/ASX 200 Index shed 3.9 per cent in the first quarter – its worst start to the year since the onslaught of COVID-19 – investors in 10-year Australian government bonds returned 1.45 per cent.