For investors viewing bonds as income-generating assets, selecting investment-grade corporate bonds is a worthwhile choice. Recent tariff announcements by President Trump have plunged the market into panic, with the volatility index (VIX) soaring above 50. However, the bond markets demonstrate their resilience amidst these fluctuations. According to Cathay Fund Management's analysis, the potential for capital gains from long-term government bonds appears limited unless a significant economic downturn occurs, suggesting that investors focus on 'income-generating assets' like corporate bonds to balance risk and returns.

Li Yu-Ling, a fund manager at Cathay, noted that during the stock market crisis from April 2 to April 4, government bond prices rose, highlighting their protective qualities against market volatility. Although there are rumors of China selling off US bonds, no definitive data supports this, and the decline in bond prices mainly reflects investor concerns about the future of US fiscal performance. The government’s capacity to repay debts and the market's liquidity demands have led to price stability issues. As market sentiments ease, bonds remain a refuge for investors, with the Federal Reserve actively ensuring liquidity to stabilize bond yields.

The notion that US bonds are 'too big to fail' is widely regarded as a risk-free asset, integral to many global central banks and financial institutions. Li added that while the short-term opportunity for substantial capital gains from government bonds may be limited, the long view remains beneficial for risk mitigation and interest income. Li also pointed out that as of the end of March, the yield on the US BBB-rated corporate bond index reached 5.35%, which is above the historical average yield of 4.32%, making it an excellent time for investors to consider allocating towards investment-grade bonds for better returns.

As a reminder from Three United News, all content here is for reference only, and investors should make careful evaluations of risks before making decisions, fully taking responsibility for investment outcomes. All investments carry risks, and fund investments can lead to gains or losses, so be sure to read the prospectus carefully before investing.