BlackRock: Rising yields undermine the stabilizing role of long-term US Treasury bonds in portfolios.

The rising bond yields in developed markets confirm BlackRock's view that the diversifying investment tools provided by long-term US treasuries and other traditional investments are losing their protective effect on investment portfolios. In a report, BlackRock stated that the surge in long-term bond yields partly reflects concerns about loose fiscal policies and worsening fiscal outlooks. The company mentioned that Japan's 30-year bond yield hit a historic high earlier this month, rising by over 100 basis points this year. "The recent surge is fueled by a fiscal stimulus plan by the Japanese government and the Bank of Japan's hint at a possible rate hike this week." The central banks of Australia and Canada have also changed their tone on interest rates, either indicating an end to rate cuts or signaling a possible rate hike.