Bonds

The 10-year Treasury yield has crept back up to around 2% from its record low of 1.4% last July, but don't expect yields to surge anytime soon.

As long the Federal Reserve continues to buy Treasuries -- which it will likely do until at least the middle of this year -- yields will remain under pressure, said Russ Koesterich, BlackRocks's chief investment strategist. (Bond rates fall when prices rise.) And even when the Fed does decide to end its bond buying program, it will likely do so gradually rather than suddenly.

Koesterich has a year-end rate forecast of between 2.25% and 2.5% for the 10-year Treasury, but he expects the move to be "slow and erratic."

With yields on the rise, Koesterich said Treasuries are unattractive and suggests focusing bond portfolios on high yield debt, bank loans and emerging market debt.

Bond guru Bill Gross is on the same page. He trimmed Treasury holdings in the Pimco Total Return Fund (PTTRX) last month, while favoring high yield and emerging market bonds, particularly debt issued by Mexico and Brazil.


  @CNNMoneyInvest - Last updated March 28 2013 11:20 AM ET
Join the Conversation
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.