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Income is returning to Fixed Income Thumbnail

Income is returning to Fixed Income

As interest rates rise, income is returning to fixed income.  

The ultra-low interest rate environment of the pandemic era gave way to a jarring reality: Markets don’t react well to rising rates. Painful short-term losses, however, could lay the groundwork for more income.

The yield on the 10-year U.S. Treasury surpassed 3% in June for the first time since 2018. Yields, which rise when bond prices fall, have jumped across bond sectors as central banks seek to quash inflation. Over time, rising yields mean more income from bonds.

Investors could benefit from holding bonds across fixed income asset classes, including high yield.

Income is returning to Fixed IncomeCorporate Bond Review