A global bond sell-off has pushed yields to multi-decade highs, with the 30-year US Treasury yield approaching levels not seen since 2007 and Japan’s 10-year bond yield reaching its highest in three decades. UBS recommends short- and medium-maturity quality bonds as the long end of the curve faces fiscal concerns, inflation uncertainty, and lower liquidity. The bank’s analysis shows that 2-year and 5-year Treasury yields would need to rise by 100 to 230 basis points before capital losses offset income returns. Ultra-short bond ETFs attracted $12.8 billion in inflows in July.
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