Bloomberg Surveillance · Sep 24, 2026
With Kelley Gerrity, Fixed Income Client Portfolio Manager at Morgan Stanley Investment Management
The 10-year Treasury yield had jumped 14 basis points the day before Kelley Gerrity came on air, and she called the move meaningful. She also called it an opportunity.
Bond investors are about to open statements showing losses, and Tom Keene said nobody talks about bond losses the way they talk about stock losses. Gerrity said the selloff has left starting yields high enough that fixed income now pays investors to own it.
"Right now, I think fixed income has an income opportunity."
Kelley Gerrity, fixed income client portfolio manager at Morgan Stanley Investment Management, on Bloomberg Surveillance. Her background is in high yield: she was managing high-yield portfolios in 2021, when that market paid far less than it does now, and she talks to insurers and other institutions about their bond allocations.
The full segment is covered here so you can skip it.
Here are the 5 calls that matter.
Key Takeaways
A 14 basis point jump in the 10-year is meaningful, and she reads it as an opportunity
Real yields now pay investors for the risk of holding longer-dated bonds, which they did not in 2021
Credit spreads can stay tight because the economy and company fundamentals are strong
This is not 2022, when bonds had an inflation problem and negative real yields
Heavy AI bond issuance was a supply problem, not a credit problem, and her team has been closing its underweight
Growth is what pays a bond, whatever the wars and tariffs
1. A 14bps Move Is an Opening
Tom Keene introduced Gerrity by saying that when prices fall and yields rise, everyone is afraid, which usually means there is an opportunity. He asked where the best risk is now.
A 14 basis point move in the 10-year is meaningful, and she is excited about bonds
Gerrity said the previous day had brought a lot of red on the screen, and that a 14 basis point move in the 10-year is meaningful. She said opportunities abound in fixed income.
"Honestly, this is the place to be. Bonds are exciting." — Kelley Gerrity
In 2021, high yield paid almost nothing
She said she does not always say that, and pointed to where yields were when she was running high-yield money.
"My background is in high yields. I was managing portfolios in 2021 when high yields was 3.78% yields." — Kelley Gerrity
That drew a quip in the studio that there was no high in the high yield. Now, she said, real yields, meaning yields after inflation, are compensating investors for taking on the risk of holding longer-dated bonds.
Big buyers are waiting at these levels
Yields keep ticking higher, she said, but at some point demand will fill in. She sees cyclical demand and structural demand, from large pools of insurance and pension money that need bonds to match their liabilities and will buy at these yields. For that reason her team is not as concerned.
