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

For much of the past four years, strategist Jim Bianco was a vocal skeptic of Treasury bonds, warning that artificially suppressed interest rates had distorted investor expectations. His stance has shifted, and the reason is straightforward: yield itself. With roughly 5.25% available on short-term Treasurys, Bianco describes a "big fat cushion" that changes the risk-reward math for fixed income.

The logic rests on normalization rather than prediction. After years in which near-zero rates pulled future returns forward, Bianco argues that 5% on bonds and 6% on stocks are more realistic long-run assumptions. At those levels, investors are finally being paid a meaningful yield for holding government debt, which can help offset price declines if rates rise further.

For markets, the shift matters because it reframes Treasurys from a asset to avoid into a credible source of income. What to watch: whether yields hold near current levels, how inflation and Federal Reserve policy evolve, and whether sustained higher yields draw capital away from riskier assets.