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

Jim Bianco, a strategist who has spent years warning against Treasury bonds, is now taking a more constructive view. His shift rests on a simple idea: after a long stretch in which artificially low interest rates distorted returns across asset classes, yields have reset to levels that look more normal. With short-term rates around 5.25%, bonds now offer what he calls a "big fat cushion" — a meaningful yield that can offset price declines if rates move higher.

The broader point is about expectations. Investors grew used to a world where rate suppression flattered both bond and equity returns. Bianco suggests 5% on bonds and 6% on stocks are more realistic long-run assumptions. Against that backdrop, U.S. Treasury notes look more attractive on a valuation basis, since an investor is now paid a real yield to hold them rather than accepting near-zero income.

What to watch: whether inflation and Fed policy allow those yields to persist, and whether the cushion proves durable if rate volatility returns. The development matters because it signals a possible rethinking of the "bonds are uninvestable" consensus that has dominated since 2020.