He’s been badmouthing Treasury bonds since 2020, but now ‘the big fat cushion’ of 5.25% yields is turning this strategist bullish

Strategist Jim Bianco, who has been critical of Treasury bonds since 2020, is now taking a more constructive view. His reasoning centers on yield levels rather than a change in his broader macro outlook: with short-term rates having been held around 5.25%, bonds now offer what he describes as a "big fat cushion" of income that was absent when yields sat near zero.

The context matters. For much of the past decade, investors grew used to returns flattered by artificially low interest rates. Bianco argues that 5% on bonds and 6% on stocks are more realistic long-run assumptions — a shift in the baseline that reframes how fixed income fits into a portfolio. When cash-like yields are this high, bonds compete with equities on income alone, which can change the calculus for allocators who had written off the asset class.

What to watch: the path of policy rates and inflation. If yields stay elevated, the income case holds; if the Federal Reserve cuts aggressively, that cushion could shrink. Duration risk — the sensitivity of bond prices to rate moves — remains the other variable.