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BlackRock, the world’s biggest money manager, on Monday took a bearish view on eurozone government and corporate bonds, saying that elevated valuations and a brightening outlook are causes for concern for fixed-income investors.

The economic recovery across the currency bloc has “steadily accelerated since mid-2016, with the region’s composite PMI hitting a six-year high in March,” said Richard Turnill, the New York-based group’s chief investment strategist.

“The disconnect between this economic outlook and heady eurozone bond valuations makes us nervous,” he said.

Mr Turnill sees short-term political risks “waning after the key spring French election, even if Italy remains a concern”. In turn, that could cause an “unwinding” in safe-haven buying and potentially ignite concerns that the European Central Bank will begin easing its accommodation — two factors that could cause government bond yields to rise.

“A jump in sovereign yields could spark outflows from richly priced investment grade bonds,” he said.

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