According to a BlackRock report, the bond market has seen some volatility amid the uncertainty around interest rates and the Federal Reserve’s monetary policy. On Friday, the 10-year Treasury yield briefly fell below 4.5%. The drop came following a weak jobs report for April and a surprise tick higher in unemployment rates.
“It’s time to start migrating back to fixed income, especially with yields at these levels,” said Steve Laipply, global co-head of iShares fixed income ETFs and co-author of BlackRock’s paper. With the Fed still working in uncertainty, the market is nearly impossible to timetable correctly.
Bonds have historically delivered the strongest performance during “hold” periods, according to BlackRock. Hence, the investment managers advise using bonds to protect US Dollars. “It is a very compelling opportunity for investors to get their fixed-income side of the portfolio right-sized,” Laipply said. Furthermore, BlackRock recommends using a bond fund or an ETF. The company says investors should use a holistic approach, which can include a mix of both, to get diversified exposure cheaper for their assets.
The US Dollar has had a tumultuous 2024, in part due to BRICS intervention. The bloc is actively looking to ditch the US dollar and influence other countries to do the same. With the latest warning by BlackRock to secure your US dollars another way, it’s clear that the alliance’s mission is succeeding. Inflation and interest rate hikes only further helped the de-dollarization initiative.
