- Bonds are viewed as a “safe-haven” asset class during periods of stock market volatility. This year, it does not feel that way.
- As bond yields move higher, bond prices move lower. Lower prices can cause unavoidable pain or losses depending on the investment.
- A laddered bond portfolio is designed to help investors benefit from a rising rate environment.
Bond yields are on the move and heading higher! What does this mean for fixed-income investors? Textbooks generally consider fixed-income markets as less volatile than equity markets. Bonds are viewed as a “safe-haven” asset class during periods of stock market volatility. This year, it does not feel that way.
There are two primary explanations for the downtrodden fixed-income market— the first being red-hot inflation. It does matter how you slice and dice inflation data. The Consumer Price Index, Producer Price Index, and Personal Consumption Expenditures all indicate that price levels are elevated—hovering near a 40-year high in some cases. Inflation is most apparent at the gas station, grocery store, hardware store. Energy and food prices have soared on an annualized basis.Download the full commentary
This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.
There are risks involved with investing, including loss of principal. Bonds will decrease in value as interest rates rise. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations.
No mention of particular securities should be construed as a recommendation or considered an offer to sell or a solicitation to buy any securities. Sample securities may or may not be held within an investor’s portfolio.
Information provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI Investments Company (SEI).