Pacific Investment Management says bond yields at multi-decade highs offer attractive income for investors, who should spread their allocations across developed and emerging markets to help protect against fiscal risks.
The money manager, which oversees about $2.33 trillion, unveiled its latest 6- to 12-month cyclical outlook on Tuesday as long-dated Treasury yields hover around the highest since 2002. The benchmark 10-year note yields about 5.25%, and the 30-year around 5.65%.
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Bonds have been slumping since mid-August as the US economy expands amid booming AI infrastructure spending, while steep energy costs keep inflation elevated and sustain the prospect of further Federal Reserve interest-rate hikes this year.
"Attractive starting yields - and the income they can offer - provide a meaningful mitigant against inflationary tail risks while preserving the potential for bonds to hedge a fading AI capex impulse or a shock to growth," economist Tiffany Wilding and Andrew Balls, the firm's chief investment officer for global fixed income, said in the report.
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Investors deploying "a global bond portfolio allocation across DM and EM can help diversify country-specific factors, including fiscal risks," according to Pimco, which is based in Newport Beach, California. The asset manager says the US and France "stand out with more challenging debt trajectories." Meanwhile, the likes of "the UK, Italy and Japan remain vulnerable - and Japan increasingly so given recent policies that add to deficits - but their debt trajectories appear sustainable under current fiscal plans."
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Pimco bets on bonds as 24-year-high yields lure
According to Pimco, bond yields are at unprecedented peaks, offering lucrative income opportunities for investors. The firm recommends allocating funds across both developed and emerging markets to lessen risk exposure. Long bonds signal possible inflation persistence, fueled by rising energy costs. They also highlight fiscal challenges in nations such as the US and France in their latest report.
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- The Economic Times
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- 289 words · 1 min
Where this came from
This story was reported and first published by The Economic Times on 6 October 2026. HUE Legacy Ventures did not write it.
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