US Treasury yields rise to highest level since 2002, two major long-term bears rarely turn bullish.

October 7 — As long-term U.S. Treasury yields recently surged to their highest levels since 2002, two well-known strategists who had long been bearish on sovereign bonds have begun turning bullish. Anatole Kaletsky, co-founder of Gavekal Research, started turning bullish on 10-year and 30-year U.S. Treasuries this week; Jim Bianco, founder of Bianco Research, also shifted toward long-term U.S. Treasuries last week, marking his first positive view on the asset in six years.

On Monday, the 10-year U.S. Treasury yield closed at about 5.31%, while the 30-year yield rose to 5.66%, both the highest closing levels since 2002. Bianco believes that after sustained selling, the current absolute yields on long-term U.S. Treasuries have become attractive. TLT, with assets of about $47 billion, had fallen for 10 consecutive trading days, but still recorded about $5.3 billion in net inflows so far this year.

Kaletsky has advised avoiding government bonds of major developed economies since 2022, but now believes U.S. interest rates may decline again in the future; Bianco believes that if the economy weakens significantly or the stock market undergoes a major correction, long bonds also have hedging value. However, factors such as the U.S. fiscal deficit, Treasury supply, AI companies' financing needs, war spending, and rising energy prices may still continue to push long-term yields higher.