Treasury yields have surged at the start of September, with the 10-year yield surpassing 4.81%, the highest since November 2023. This increase is driven by rising oil prices and concerns over U.S. debt levels. Kristy Akullian from BlackRock highlights that both government and private sector borrowing, particularly for AI investments, are influencing market reactions.
The 30-year Treasury yield has reached 5.269%, indicating heightened sensitivity to interest rate fluctuations. BlackRock advises investors to focus on investment-grade and high-rated speculative bonds, suggesting funds like the iShares Flexible Income Active ETF (BINC), which offers a 30-day SEC yield of 5.3%.
Additionally, BlackRock sees potential in securitized assets and real-asset backed credit, which provide attractive income with stable cash flows. For those concerned about inflation, Treasury Inflation-Protected Securities (TIPS) are recommended as they can offer meaningful income and protection against inflationary pressures.
Despite recent inflows into TIPS, positioning remains light, suggesting room for further investment as the year progresses