One thing that has scared some investors heading into October is the rise in bond yields, particularly in the fixed income Treasury market.
That can be concerning, especially if yields continue surging, but there’s a potentially brighter side worth knowing. Ready for it?
Higher yield means more income.
Recently, The Wall Street Journal interviewed a few investing professionals with different opinions on rising rates. Rick Rieder, a bond manager at the largest asset manager in the world, took the positive view.
My funds are yielding 7-plus percent with a three year duration. I’ve waited four decades for the ability to do that,”…
Rieder says investors don’t need to take big risks to hit attractive fixed-income returns in the current environment. He is also upbeat that prices of long-term Treasurys will stabilize. In previous instances where the 10-year yield breached 5%, returns over the following 12 months were strong, he has been telling clients.
Higher yields mean that the number of investors wanting to talk about bonds is “exploding,” Rieder says, despite the losses this year.
“People recognize that once you get the 10-year above 5%, you tend to make money,” he said. “The question is whether today is the day to enter.”
Rieder thinks that the answer is a cautious “yes.”1
He may or may not be right, but it could be encouraging for those with heavy stock portfolios who may be looking to reduce risk.
Yields like these have historically been a good entry point for future bond returns.
BlackRock goes back even further than the above chart showing how higher beginning rates for bonds can bode well for future returns.2
This doesn’t mean you go out and buy bonds right now. They have their own interest rate risk, and I don’t make recommendations over “the Internets.” But it does provide some evidence for those looking to revisit their allocations and how bonds could play a role in one’s overall financial plan and risk profile.
—
Sources:
1. “Six Investing Pros Weigh In on Surging Yields—and How to Trade Them”, September 27, 2026. Accessed online.
2. “Student of the Market”, October 2026, page 10. Accessed online.