U.S. asset manager Vanguard is bullish on longer-dated Treasuries after this year's brutal selloff, betting that the Federal Reserve is at the end of its rate hiking cycle and that the economy will slow next year.
Despite a "cruel summer for bond investors," long-term bonds continue to remain attractive as the economy will likely enter a shallow recession next year, the world's second-largest asset manager said in a fixed income outlook seen by Reuters.
"The relative advantage short-term government bonds have can fade quickly, and investors can fare better when they lock in higher rates for longer," Vanguard said. Vanguard said it expects interest rates will not be cut until at least mid-2024, and that bond yields will not return to the low levels that characterized the U.S. bond market in recent history.
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