Will Higher Yields Derail Bond Investing

UBS maintains a positive outlook for long-term bond investors, arguing that current market rate-hike expectations are too aggressive. The firm recommends adding to intermediate-maturity sovereign bonds to lock in elevated yields.

Key Takeaways

• 1.UBS believes market expectations for central bank rate hikes are overly hawkish and do not account for the growth-dampening impact of higher oil prices.
• 2.Government bond yields currently trade at attractive levels relative to historical ranges, particularly for intermediate maturities (around 5 years).

Table of Contents

• Government bond yields have risen on inflation, rate, and debt fears.
• But we think investors are expecting too many rate hikes.
• So, we like locking in yields across multiple scenarios.
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• One liner
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• Investment view