Bond Veteran Bianco Turns Bullish on U.S. Treasuries for the First Time in Six Years
nashnova research
Longtime bond bear Jim Bianco has flipped to bullish on U.S. Treasuries after the 10-year yield topped 5%, calling the risk-reward "deeply asymmetric" — his first stance reversal since yields hit a record low of 0.3% in 2020.
A six-year bear just flipped — why now?
Jim Bianco, founder of Bianco Research, has been bearish on Treasuries since 2020, when the 10-year yield sat at just 0.3%.
With yields now above 5%, he says the risk-reward is attractive enough to go long.
He extended the duration — a measure of sensitivity to rate moves — of his actively managed bond index from 5.7 years to over 6, the benchmark for a roughly $100 million WisdomTree ETF.
This means → a veteran known for staying short is voluntarily adding rate exposure, signaling he sees a rising probability that rates have peaked.
How asymmetric is the payoff?
Bianco's math: a buyer of 10-year Treasuries today needs yields to rise to roughly 6% within a year before price losses wipe out coupon income.
A 1-percentage-point rise in yield → a loss of less than 2%; the same move down → a gain of about 13%.
In plain terms = the upside is six times the downside — that is what he calls a "thick cushion of safety."
The Fed just turned hawkish — why does that make him want to buy?
Bianco argues that over the past two years, the 10-year yield rising *during* a cutting cycle was the market warning the Fed its policy was too loose.
This month, under new Chair Kevin Warsh, the Fed raised rates for the first time since 2023 and signaled more hikes ahead.
Rate-swap markets now price in nearly four 25-basis-point hikes over the next 12 months, lifting the policy rate from just under 4% to about 5%.
This means → the Fed is finally catching up. Once the market believes tightening is sufficient, long-end yields have room to fall — and that is the core of Bianco's bet.
Is a 5% yield a crisis signal or a return to normal?
Bianco's answer: the latter. Since the 1981 peak, the 10-year yield has averaged roughly 5.3% — close to where it sits today.
Manufacturing surveys are beating expectations and equities are near record highs — neither supports a recession narrative.
"The zero-rate era from 2010 to 2020 was the absurd outlier," he says. "We are returning to normal."
This reflects a deeper conviction: high yields are not necessarily bad news — it was the low-yield decade that was abnormal.
What is his track record — and can he get this right?
Bianco's active bond index has returned an annualized 2.6% since December 2023, versus 2.32% for the Bloomberg U.S. Aggregate Bond Index.
The corresponding WisdomTree ETF charges 0.6% in fees; its net return over the same period is about 2.1%.
He concedes the sell-off may not be over and is scaling in gradually rather than making one large bet.
In plain terms = he is not betting that yields reverse immediately — he is boarding at what he considers favorable odds, watching how the Fed's hiking path and inflation ultimately converge.
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