Expect more structural support for higher yields over the medium term, says Citi's Kate Moore

Kate Moore, Chief Investment Officer at Citi Wealth, advocates for a cautious stance on long-duration bonds as Treasury yields reach 20-year highs. This shift in the bond market is driven primarily by rising real yields and structural growth rather than just inflation expectations. To adapt to this environment, investors should challenge the traditional 60/40 asset allocation model, which incorrectly assumes bonds always act as a portfolio ballast. Instead of long-dated Treasuries, Moore emphasizes flexibility through shorter-duration fixed income and alternative assets like gold, which has significantly outperformed bonds recently. While crypto remains excluded from formal recommendations due to modeling difficulties, other "outcome-oriented" investments such as public and private infrastructure offer more attractive, less correlated returns. Ultimately, the current market requires a fundamental readjustment of what constitutes "normal" yield levels after a two-decade aberration of structural lows.