BlackRock: Rising yields weaken the stabilizing role of long-term US Treasuries in the portfolio

Gold Financial reports that developed market bond yields are rising, confirming BlackRock's view that the role of traditional diversification tools such as long-term U.S. Treasury bonds as portfolio ballast is weakening. In a report, BlackRock stated that the surge in long-term bond yields partly reflects growing concerns over loose fiscal policies and worsening fiscal outlooks. The company noted that Japan's 30-year bond yield hit a record high earlier this month, having risen over 100 basis points this year. "This recent rally was triggered by a Japanese government fiscal spending plan and hints from the Bank of Japan this week that it may raise interest rates." The central banks of Australia and Canada have also shifted their tone on interest rates, either hinting that rate cuts are over or suggesting that rate hikes may occur.
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