Jupiter increases European government bond exposure as ECB hike pricing "overdone"

LONDON, May 13 (Reuters) - Asset manager Jupiter has been buying European government bonds, particularly shorter-dated German debt, and reducing exposure to U.S. Treasuries because they think the market is pricing in too many rate hikes from the European Central Bank and Bank of England.

"As many as three (ECB) rate hikes are now priced in, this feels overdone," said Ariel Bezalel, investment manager at Jupiter, pointing to signs of slowing European economic growth, such as Tuesday's French unemployment data.

That led to him shifting into European debt, especially German short-dated debt.

In contrast, he said, "we are worried about America overheating."

Bezalel said he also thought markets were pricing too many Bank of England rate hikes but he had not added to his position in British government bonds because of the elevated political risk premium and he already had sufficient exposure.

However, he said he thought developments in 2022, when gilt markets sold off due to then Prime Minister Liz Truss' "mini-budget", would mean potential alternative British prime ministers would be wary about changing policy in a way that would cause a long-lasting selloff in gilts.