Barron's Streetwise The Golden Age of Income
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May 23, 2025 Russ Brownback, Global Head of Macro Positioning for Fixed Income at BlackRock, shares insights into the current bond market's turbulence. He explains why recent bond declines present a significant investment opportunity. The conversation explores the appeal of cryptocurrencies as alternative safe havens amidst U.S. deficits and inflation. Brownback discusses the evolution of high-yield bonds, emphasizing shifts in credit ratings, and offers a bullish perspective on the U.S. economy, highlighting AI's positive impact on productivity and profits.
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Golden Age of Income
- We're in a golden age of income where fixed income yields are unusually attractive despite uncertainty.
- This era offers strong nominal and real yields, particularly when adding corporate and securitized credits.
Deficits Pressure Bond Market
- Long-term U.S. Treasury bonds sold off due to concerns over rising deficits and budget negotiations.
- Higher deficits mean more bond supply and potential inflation, reducing the attractiveness of nominal fixed income.
Focus on Income Not Duration
- You can't predict interest rate direction now due to market uncertainty.
- Investors should harvest attractive nominal and real yields focusing on income rather than price appreciation.