Bond Veteran Jim Bianco Still Bullish As Yields Soar

Global bond markets are reaching a significant valuation turning point as rising yields attract investors for the first time in years. US Treasury yields around 5.5% now offer a compelling "value basis" where high coupons provide a substantial buffer against price volatility, making them more attractive than struggling equities. While the US market faces "sticky" inflation stalled at 3%, European sovereign debt remains more precarious due to energy-driven inflation linked to the Russia-Ukraine conflict and refinery disruptions. The UK faces particularly acute pressure, characterized by "mid-to-high-grade" fiscal problems and political instability that risk pushing British yields toward levels typically associated with more volatile economies like Italy. Despite soaring national debt in the US, current market movements are primarily driven by the realization that the Federal Reserve's 2% inflation target remains elusive, necessitating a higher-for-longer yield environment.