A sharp selloff in US Treasuries is helping the bond market’s valuations look more reasonable in the run-up to an unpredictable US election, according to BlackRock Inc.
David Rogal, portfolio manager at BlackRock’s fundamental fixed income group, said he likes intermediate bond yields after a resilient labor-market report upended market expectations for aggressive Federal Reserve interest-rate cuts. The yield on five-year Treasuries is now hovering around 3.9%, the lowest-yielding maturity on the curve.
“As we are going into the election, things look much closer to fair,” he said in a telephone interview on Wednesday. “We were more bearish on the front end of the curve recently and have pared that back.”
Investors are now able to lock in somewhat higher rates on intermediate bonds, while being less exposed to a “potential correction in term premium or longer duration bonds given the debt issuance story,” said…
