Growing doubts about the Federal Reserve's ability to control inflation are prompting some global bond investors to seek opportunities in markets like Australia and Europe, adding to the selling pressure on U.S. Treasuries.

Schroders, which manages $1.1 trillion in assets, is expanding its bearish position on U.S. government bonds while buying short-dated sovereign debt in Australia, the UK, and the eurozone. The firm believes the Fed's latest meeting reinforced its view that U.S. policymakers may still need to tighten policy further. The fund is betting that short-term bond yields in these markets will decline, and it holds short positions in U.S. 5-year and 10-year notes.

Kellie Wood, Schroders' Australian head of fixed income, stated that the Fed's meeting undoubtedly strengthened their view to hold or even increase their short positions in U.S. Treasuries. She noted there are excellent opportunities outside the U.S., adding that they are bullish on markets like Australia, Europe, and the UK because these central banks are more likely to keep rates unchanged compared to current market pricing.

Fed Chair Kevin Warsh has repeatedly pledged to bring inflation back to the 2% target, but policymakers decided to hold rates steady with the overall inflation rate still at 3.5%. The market reacted by pushing 30-year U.S. Treasury yields to their highest level since 2007, while shorter-dated bond yields fell as traders reduced bets on near-term rate hikes.

The bond market's message suggests that despite Warsh's tough talk on inflation, the Fed's lack of urgency increases the risk that inflation may not be quickly controlled.

Rajeev De Mello, a global macro portfolio manager at Gama Asset Management in Geneva, is considering increasing positions in Australian, South Korean, Singaporean, and Norwegian bonds while reducing holdings in longer-dated U.S. Treasuries. De Mello noted that many other central banks are on the right track, with consistent communication, consistent policy frameworks, and understandable policy reaction mechanisms.

Over the past three months, the benchmark 30-year U.S. Treasury yield has risen about 27 basis points, while comparable Australian government bond yields have increased only 8 basis points, and UK equivalent yields have risen just 4 basis points.