Real Yields Deemed Attractive for Duration Exposure

Dow Jones
Aug 19

0527 GMT - Attractive real yields are supportive for duration exposure for the coming months, Julius Baer's Dario Messi says in a note. "Attractive real yields continue to argue for maintaining duration exposure into year-end or extending it where portfolios remain underinvested," the head of fixed-income research says. "With policy rates still relatively high and the labor market broadly balanced, the U.S. Federal Reserve is unlikely to find itself decisively behind the curve," Messi says. This should contain the risk of another sustained rise in long-term yields, he adds. As for duration, Julius Baer favors exposure through five- to 10-year corporate bonds, "while remaining disciplined on credit risk."

 

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