American Century Says 5.25% US 10-Year Treasury Yield Is an Attractive Buy

American Century Investments said a 5.25% yield on the US 10-year Treasury presents an attractive buying opportunity for investors. The firm also argued that markets are too aggressive in pricing in as many as four Federal Reserve rate hikes over the next year.

Walter Bloomberg reported on Oct. 6 that American Century sees the recent surge in Treasury yields as largely driven by competition for capital tied to a boom in AI-related credit markets.

The firm said expectations for a trillions-of-dollars expansion in AI investment may be unrealistic. That, it said, could lead to a "buyer strike," with investors unwilling to step in.

American Century also said cracks are emerging in the corporate bond market, particularly in lower-rated segments. Those signs are especially pronounced in CCC-rated corporate debt, it said.