Bond market investors looking for an edge may want to pay closer attention to the front of the yield curve, according to Noah Wise, head of global macro strategy and senior portfolio manager at Allspring Global Investments. His recommendation is straightforward: shift exposure toward short-term Treasurys rather than parking money in longer-duration assets. The reasoning comes down to the current monetary policy backdrop, which Wise believes creates a compelling case for collecting yields above 4% with relatively low risk.
Wise told CNBC’s “ETF Edge” this week that the market is already pricing in a couple of Federal Reserve rate hikes over the next couple of years, and that dynamic makes short-term government debt particularly appealing. The strategy fits into a broader diversified portfolio approach, he explained, one designed to deliver consistent profits even as investors navigate uncertainty around central bank policy decisions. His comments came just ahead of Wednesday’s Fed decision on interest rates, and in a follow-up note to CNBC after the central bank left rates unchanged, Wise made clear that his investment thesis had not shifted.
Beyond Treasurys, Wise sees real opportunity in the U.S. credit market, pointing to strong macro fundamentals as a reason to favor American bonds over their European counterparts. He likes both investment grade and high yield credit domestically, suggesting that the economic picture in the United States remains sturdy enough to support those positions. But he is also looking beyond domestic borders for income, particularly toward emerging markets where yields can reach double digits.
Latin America especially has caught his attention, with Wise noting that investors can find attractive returns there despite geopolitical challenges and risks. Even accounting for that volatility, he believes the region offers a way to generate meaningful yield in a genuinely diversified manner. For advisors and institutional clients managing portfolios through periods of policy transition, the message is that staying flexible and tactical along the short end of the curve may be the smarter play while the Street waits for clearer signals from the Fed.
