The US Department of the Treasury is holding a record-breaking auction this week, with $125 billion worth of Treasury notes and bonds up for grabs.
To provide insights into the implications of this event on Treasury yields (^TYX, ^TNX, ^FVX), PIMCO Core Strategies Chief Investment Officer Mohit Mittal joins Catalysts.
Mittal highlights that there has been "a correction in valuations," and this repricing has created value in the fixed-income market. He believes that "on a go-forward basis," investors can expect "healthy returns in fixed-income under most scenarios", which is "why you're seeing a healthy amount of demand" for these auctions.
Mittal advises investors to look at high-quality fixed-income areas, suggesting sectors such as agency mortgages in the US. Additionally, he recommends exploring opportunities "outside of the US where growth has been somewhat weaker," naming high-quality sovereign bonds as potential options.
In the ongoing "higher-for-longer" interest rate environment, Mittal believes that yields will be able to sustain in this environment. However, he adds that "the market is already pricing that" in, suggesting that the current yield levels reflect the market's expectations of persistent higher rates.
For more expert insi
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