Two well-known strategists who had long stayed bearish on sovereign bonds have shifted to a bullish stance on long-dated U.S. Treasuries as yields climbed to their highest closing levels since 2002. Gavekal Research co-founder Anatole Kaletsky said this week he now favors 10-year and 30-year Treasuries, while Bianco Research founder Jim Bianco turned positive on long bonds last week for the first time in six years. On Monday, the 10-year Treasury yield closed near 5.31% and the 30-year rose to 5.66%. Bianco said the absolute yield level on long-dated Treasuries has become attractive after an extended selloff. The iShares 20+ Year Treasury Bond ETF (TLT), which manages about $47 billion, had fallen for 10 straight trading sessions before still posting roughly $5.3 billion in net inflows so far this year. Kaletsky, who had advised avoiding government bonds in major developed economies since 2022, now sees a chance that U.S. rates may decline again. Bianco also said long-duration bonds could still serve as a hedge if the economy weakens sharply or equities suffer a larger pullback, though fiscal deficits, Treasury supply, AI-related corporate financing demand, war spending and rising energy prices may keep pushing long-term yields higher.
Two prominent strategists who had been bearish on sovereign bonds for years have turned constructive on long-dated U.S. Treasuries as yields surged to their highest levels since 2002.
Anatole Kaletsky, co-founder of Gavekal Research, began favoring 10-year and 30-year Treasuries this week. Jim Bianco, founder of Bianco Research, also turned positive on long-dated Treasuries last week, marking his first favorable view on the asset in six years.
Yields reach their highest closing levels since 2002
On Monday, the 10-year U.S. Treasury yield closed at about 5.31%, while the 30-year yield rose to 5.66%. Both were the highest closing levels since 2002.
Extended selloff draws in former bears
Bianco said the absolute yield level on long-dated Treasuries has become attractive after a prolonged selloff. The iShares 20+ Year Treasury Bond ETF, or TLT, which has about $47 billion in assets, had fallen for 10 consecutive trading sessions, though it still recorded roughly $5.3 billion in net inflows this year.
Kaletsky had advised investors to avoid government bonds in major developed economies since 2022. He now believes U.S. interest rates may fall again in the future. Bianco also said long-dated Treasuries could retain hedging value if the economy weakens materially or if the stock market sees a larger correction.
Several forces may keep long-term yields elevated
Even so, several factors may continue to push long-term yields higher, including the U.S. fiscal deficit, Treasury supply, financing demand from AI companies, war-related spending and higher energy prices.
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