Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on August 24, 2026 in New York City.
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Investment advisers to the ultra-high net worth told CNBC that the sharp decline in bonds has given investors a rare opportunity to lock in returns similar to the stock market without the risk associated with stocks. High-income investors can make even bigger profits by buying tax-exempt municipal bonds and using the proceeds to recoup tax losses and reinvest them in higher-yielding bonds, says UBS’s Jason Katz.
“Frankly, we’ve been suggesting to our clients that this is a generational opportunity to really ballast their portfolios and generate income. You need to be a buyer here,” said Katz, managing director and senior portfolio manager at UBS Wealth Management.
On Wednesday, U.S. Treasury yields rose to their highest levels in more than 20 years. 10 year treasury reached 5.365%; 30 year treasury Bond yield reached 5.732%. The 10-year US Treasury yield hit a record low of 0.318% in March 2020.
Katz said rapid and sudden changes in interest rates are giving investors an opportunity to buy if they’re scared and sell if they’re greedy. But some clients are reluctant to invest in bonds, he added, given the recent decline in stock prices and years of low interest rates that have made bonds less attractive.
“I feel like until recently people didn’t have to pay as much attention to bonds, so I’m explaining to them all day every day how bonds work,” he said.
Katz said the potential rewards are compelling. He estimates that for wealthy investors, medium- and long-term municipal bonds could offer tax-equivalent yields within 1 to 2 percentage points of average stock market returns without taking on the same level of risk. Katz said short-term and intermediate-term bonds offer the best return on investment.
Kriti Gupta, executive director and global investment strategist at JPMorgan Private Bank, recommends exposure across the maturity curve. Mr. Gupta said the bank was neutral on bonds, but said higher yields provided an “attractive entry point.”
“We’re not banging on the table and saying buy, buy, buy,” she said. “We’re saying there should be full exposure. And if you have the cash — which many of our customers do, by the way — and you’re looking for an opportunity to get into the market, now might be the time.”
Mr. Gupta emphasized the tax efficiency and value of municipal bonds for high-income investors, noting that municipal bonds are the cheapest they’ve been since at least 2011.
The highest-rated 30-year municipal bond yield reached 5.13% on Oct. 1, according to Nuveen. For investors subject to the highest federal tax rate and net investment income tax, the investment manager calculated that this equates to a taxable yield of 8.67% on taxable bonds.
Mike Silverman, Cresset’s chief investment officer, noted that high credit quality is important and said the company would not underperform AA-rated municipal bonds.
He added that duration recommendations should be based on the customer’s financial objectives and liquidity needs rather than yield. Silverman said the broader objective is for clients to build portfolios that can withstand market fluctuations.
“We have to design programs so that customers are never forced into a sale, because that would destroy wealth,” he said.
