Yields Surged to Kick Off September. BlackRock Spots Solid Income in This Corner of the Market
Today's higher yields offer a solid starting point for returns in fixed income, but investors will need to be picky about where they take credit risk.
TL;DR
- Treasury yields rose sharply at the start of September, driven by inflation concerns and U.S. debt levels.
- The 10-year Treasury yield exceeded 4.81%, its highest since November 2023.
- BlackRock advises investors to be selective with credit risk, focusing on investment-grade and high-rated speculative grade bonds.
- Opportunities are seen in 'plus sectors' like high-yield bonds, bank loans, and international fixed income, which may require an active approach.
- Securitized assets and real-asset backed credit are recommended for attractive income and resilience.
- Treasury Inflation-Protected Securities (TIPS) are highlighted as an attractive hedge against inflation.