After benchmark yields surged to their highest level in 20 years, longtime Wall Street market veteran Jim Bianco believes an attractive entry point has emerged, and he has turned bullish on US Treasuries for the first time in six years. "This is a value investment opportunity," said Bianco, president and founder of Chicago-based Bianco Research. "If yields start rising further, I will continue to add to my position."

In recent weeks, market sentiment toward bonds has deteriorated sharply, dragged down by a combination of factors including soaring energy prices, persistently high fiscal deficits, lingering inflation, the resilience of the US economy, and massive technology investment funding the AI boom. As rising oil prices prompted traders to increase bets that the Federal Reserve will continue raising interest rates, the 10-year US Treasury yield surged to 5.27% on Monday, the highest since 2007.

Although the bond selloff may not be over yet, Bianco said that yields across most maturities have risen above 5%, making the risk-reward ratio of holding bonds increasingly attractive. As a result, he increased the interest rate exposure (duration) of an active index he manages, which is tracked by a WisdomTree exchange-traded fund (ETF). The duration of this index has now increased to more than 6 years, compared with 5.7 years for the Bloomberg US Aggregate Bond Index.

"Everyone is extremely bearish on the bond market right now," Bianco said. "Buying bonds at a 5.2% yield level already provides a substantial cushion. Now is not the time to panic about this."

Bianco has been in the industry for more than 40 years, having worked at First Boston and UBS before founding Bianco Research in 1998. He said he had been bearish on the bond market since the worst period of the pandemic in 2020, when the 10-year US Treasury yield touched a record low of 0.3%. Now, as yields have rebounded, the returns on bond investments have become more substantial.