(Bloomberg) — Long-duration bonds are set for a comeback later in 2024 as macroeconomic conditions soften, according to strategists at Bank of America Corp.
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Positioning in markets, the next moves in monetary policy, and the risk to corporate profits from some weaker signals on the economy set the scene for a reversal of the “anything but bonds” trade in the second half, a team led by Michael Hartnett wrote in a note.
He pointed to investors being very long on cash, investment-grade bonds and stocks, “but no one” making bullish bets on the 30-year Treasury, which Hartnett sees as the best hedge for weaker nominal growth.
While the outlook on the monetary policy front is set to be easier, government spending is likely to tighten over the next 12 months, a setup that’s positive for bonds, he said. Hartnett added that a surprise rally in yields is supportive of “leverage plays” such as China, the UK,…
