US 10-year bond yield expected to rise to 2.5%

Following a four-month sell-off in US bonds, AllianceBernstein LP believes it’s time to buy. Matthew Sheridan, one of the institution’s fund managers, predicted that yields on 10-year US bonds will fall to between 2.5% and 3% next year as the Fed begins to cut interest rates. The yield on the 10-year US bond has increased by more than 430 basis points since the beginning of the year and is currently at 4.31%. According to data compiled by Bloomberg, the American Income Portfolio fund managed by Sheridan has outperformed 75% of similar funds with an increase of around 2% this year. Sheridan’s strategy is based on expectations that the Fed will not raise interest rates further. The dot plot, or members’ future interest rate expectations, that the Fed, which will announce its interest rate decision on Wednesday, will share at this meeting will be an important indicator in this regard. Sheridan said, “The risk-return ratio of owning 10-year US bonds is attractive to us. “The real question is how long the Fed will keep rates at these high levels,” he said.