Vanguard Group increases its holdings in US Treasury Bonds against the trend: A yield of over 4.25% is considered a "golden opportunity", betting on the Fed cutting interest rates this year.

Vanguard Group stated that it is increasing its holdings of US Treasury bonds, taking advantage of the opportunity to lock in rates as yields rise following the Middle East conflict, hedging against potential risks of economic growth slowdown. Vanguard Group reiterated its view that the Federal Reserve will cut interest rates once this year, but the interest rate swap market has not fully reflected this expectation. In its latest quarterly outlook report, the asset management company's active fixed income team pointed out that as the yield on US 10-year Treasury bonds has risen above the "fair value" range of 3.75% to 4.25%, the team has been increasing its holdings of long-term bonds. The benchmark rate (which affects factors such as corporate borrowing costs and mortgage terms) has risen by over 30 basis points since late February, reaching around 4.3%, due to the Iran conflict pushing up oil prices and reigniting concerns about inflation. "We still believe that yields above 4.25% are an attractive level to extend duration and enhance portfolio resilience against potential growth risks," wrote Sara Devereux, Global Head of Fixed Income at Vanguard Group in the report. Devereux stated that her team entered the market after some pressure was relieved in the energy market, reducing the risk of central bank policy becoming extreme. Crude oil prices briefly exceeded $110 per barrel in early April, but with a two-week ceasefire agreement between the US and Iran taking effect, oil prices have fallen from recent highs, although they remain volatile. Devereux pointed out that one consequence of this conflict is the divergence in global monetary policy directions, creating relative value investment opportunities in various regions. For example, Vanguard Group favors German bonds over US Treasury bonds, as the impact on the US economy as a net energy exporter is smaller. Vanguard Group also continues to reduce its holdings of Japanese bonds, citing fiscal and monetary policy risks. In the credit market, Vanguard Group continues to favor investment-grade bonds, noting their sound fundamentals, strong demand, and yields above 5%. However, the company believes that there is greater diversification among bonds from different industries and issuers, meaning that investors need to be more careful in their selection. "Last year's credit performance was more like a rising tide lifting all boats, while this year is more like bond-picking investment leading the way," Devereux said. On Tuesday, the latest research report from Bank of America's strategy team also pointed out that US bond yields still contain an "excess risk premium" for the Middle East conflict, creating a rare trading window. The Bank of America strategy team, led by Mark Cabana, suggests that investors should buy mid-range bonds in the yield curve - typically referring to 5-year medium-term government bonds - and bet on a steepening yield curve. This strategy is built on the three pillars: the war premium will eventually fade, the Fed is approaching a dovish stance, and the glut of long-term bonds has not been fully digested.