Bond Bear Jim Bianco Turns Bullish as 5% Yields Hit Fair Value
Key Summary
Bianco Research president Jim Bianco has turned bullish on bonds despite a selloff, citing fair value at 5% yields based on economic growth and inflation. He believes higher yields reflect normal rates, not a broken market. Bianco is adding exposure gradually as the 10-year Treasury yield nears two-decade highs.
Current Market Outlook
Bianco Research president Jim Bianco has turned bullish on bonds, citing fair value at 5% yields. He believes higher yields reflect normal rates, not a broken market. Bianco is adding exposure gradually as the 10-year Treasury yield nears two-decade highs.
Market Drivers
Bianco attributes the current market to inflation near 3% and real growth near 2%, resulting in a 5% nominal economy. He notes that the 2010 to 2020 stretch of negative rates and money printing still shapes how investors read today's yields.
Bond Market Analysis
Bianco sees borrowing by hyperscalers as manageable, but notes that triple-C credits, some of the lowest-rated corporate debt, pose a strain. Companies that refinanced at lower rates five years ago could face higher costs when that debt matures. Bianco is monitoring the risk but sees no problem yet.
Market Outlook
Analyst Benjamin Cowen expects the 10-year yield to peak before mid-November, after its Oct. 1 high of 5.342%. Cowen still sees long-term rates climbing over the next 10 to 20 years. If 5% proves a durable baseline, Bitcoin and other risk assets would face a higher Treasury hurdle.