A strategist who spent years warning investors away from U.S. Treasury bonds now says he is buying them. Jim Bianco, president of Bianco Research, told MarketWatch that yields around 5.25% have created what he called a “big fat cushion” that makes government debt attractive again.
Bianco has criticized Treasurys since 2020, when yields sat near record lows and offered little compensation for inflation. His shift marks a notable turn from one of the bond market’s more vocal skeptics.
The change rests on simple math. A 5.25% yield means an investor locks in that return by holding the note to maturity, even if prices swing in the meantime. That buffer absorbs much of the pain from further rate increases.
“The big fat cushion” of 5.25% yields is what flipped his view, Bianco said. He now sees value in U.S. Treasury notes rather than treating them as a trap.
His comments land during a broader reassessment of what counts as a normal return. For most of the past fifteen years, central bank policy held interest rates near zero, pushing investors into stocks and other riskier assets in search of income.
That era distorted expectations, Bianco argued. Returns of roughly 5% on bonds and 6% on stocks are more realistic benchmarks, he said, and current Treasury yields finally clear that bar.
The stakes are large for ordinary investors. Treasury yields set the floor for borrowing costs across the economy, from mortgages to corporate debt. When yields rise, savers earn more but borrowers pay more, and stock valuations often come under pressure.
Bianco’s call also carries weight because of his track record. He spent the early 2020s telling clients that bonds were not the safe harbor they appeared to be, a stance that proved correct as the Federal Reserve raised rates and bond prices fell sharply.
Now the same logic works in reverse. After a historic selloff drove prices down and yields up, the income component of bonds has grown large enough to matter again.
Risks remain. If inflation reaccelerates or the Fed keeps rates higher for longer, bond prices could fall further. But at 5.25%, an investor collects that yield while waiting, which shortens the odds of a painful outcome.
Bianco’s pivot does not mean he expects a rally in bond prices. It means he sees the current yield as fair compensation for the risk, a stance closer to value investing than to a bet on falling rates.
For investors who lived through the low-rate years, the message is that the old playbook may no longer apply. Bonds, long dismissed as dead weight in a portfolio, are once again paying investors to hold them.
