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Intervention in the financials sector by the US government could force fund managers to restructure bond and currency strategies, according to Newton Investment Management.

Stewart Cowley, head of global fixed income at Newton, said the plans by US regulators could have far-reaching consequences.

“It’s kind of got to a point now where, if they go through with this plan, it is going to be a disaster,” he said.

Mr Cowley said the plans – which involve a government-backed vehicle buying up bad assets of US banks and foreign banks with US subsidiaries – could have serious effects on the bond and dollar markets.

He lambasted the “blank-cheque” approach by the US government and expressed concern that future prospects for US bonds had worsened after steps taken by the government to shore up banks.

“In doing so, it has denied the natural forces of free-market economics, and favoured short-term gains,” he added.

Mr Cowley said Japan was a country that had been through a similar experience in the 1990s, but he pointed out one important difference between the two situations.

Japanese consumers had a savings ratio of 15 per cent before the recession, compared with US consumers, who have relatively little in the way of savings.

Further, Mr Cowley said international investors were unlikely to buy US bonds.

“The US simply isn’t in that position, and it appears to be gross folly to think the US can start flooding the world with bonds and dollars without there being consequences," he said. "Anything that is over-supplied has a tendency to fall in price."

Mr Cowley said a funding gap could emerge if foreign investors felt reserves would be better spent in their own economies.

A shift from west to east was likely to happen in the mid-term, Mr Cowley explained, as investors aim to avoid exposure to western economies in favour of capital-rich countries in Asia.

He said Newton’s current bond and currency strategy for global bond funds might involve selling bonds at near all-time yield lows, while retaining a greater currency weighting.

"Having had a long duration over the summer, it’s time to take some of that risk off the table and concentrate on the currency allocations in the portfolio," he said.

However, he said one of the biggest problems faced by the US would be its loss in credibility - “going from bad to worse” after a period during which it understated the problems facing the economy.