BlackRock: Rising yields weaken the stabilizing role of long-term U.S. Treasuries in portfolios

rising bond yields in developed markets confirm BlackRock's view that the role of traditional diversification tools such as long-term US Treasury bonds as portfolio ballast is weakening. BlackRock stated in a report that the surge in long-term bond yields partly reflects growing concerns about loose fiscal policies and deteriorating fiscal prospects. The company said that Japan's 30-year bond yield hit a historic high earlier this month and has risen by more than 100 basis points this year. "The recent round of increases was triggered by a fiscal spending plan by the Japanese government and the Bank of Japan's hint this week that it might raise interest rates." The central banks of Australia and Canada have also changed their tone on interest rates, either suggesting the end of rate cuts or hinting at possible rate hikes.