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[NEW YORK] Greg Peters, who helps oversee more than US$650 billion, said the recent jump in bond yields is a sign that investors should add to their holdings, rather than panic.
"It's way too early to call the death of the bond market here," Mr Peters, who is senior investment officer at PGIM Fixed Income, said Monday on Bloomberg Radio.
"I actually like when investors do that."
PGIM, the US$1 trillion asset manager at Prudential Financial, is affirming its view that Treasuries are likely to extend their decades-long rally, even after yields surged in the last two weeks on concerns about central banks tightening monetary policy.
Robert Tipp, the chief investment strategist at Peters's unit, said Friday that "bonds are winning" over the long term.
The yield on the 10-year Treasury was 2.38 per cent as of 10.10am in New York. That's up from 2.14 per cent on June 26.
"It was just a short few weeks ago where bond prices were rallying, and yields were continuing to plummet as it seemed like investors were really kind of getting on board," Mr Peters said.
"And the recent sell-off kind of shook that out. So I think that got rid of a lot of the speculative interest in the bond market, and I think the bond market is in a much more rational place today."
Mr Peters said some investors may be overestimating the risk of rising consumer prices and labour costs, adding that he believes inflation peaked in February. Treasuries will help hedge against disinflation, he said.
Jim McCaughan, the chief executive officer of Principal Global Investors, said Monday that last week's bond slump was probably a short-term slide tied to uncertainties about the Group of 20 summit and government policy in Washington.
"I don't think it's any worse than that," Mr McCaughan said Monday on Bloomberg Television.
"I don't see why you'll get a really sustained sell-off."
Janet Yellen, the chair of the Federal Reserve, is scheduled to deliver the semi-annual Monetary Policy Report to Congress this week - first to the House, then to the Senate.
Mr McCaughan said her remarks could calm Wall Street, especially if she sends signals that investors are expecting, like hints that the central bank is on target for increasing interest rates once more this year and twice in 2018.
"Then I think the market will settle down again," he said.
"I don't really see a real bear market in bonds getting hold."
PGI oversees more than US$400 billion and is part of Des Moines, Iowa-based life insurer Principal Financial Group.