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Use select charts from the Guide to the Markets to engage in portfolio discussions.

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Fixed income investing

Fixed income investors are left in a tricky spot today; many rely on the asset class for diversification and for income, but at the same time recognize the risk posed by the potential for rising rates. But by investing across core, core complement and extended fixed income sectors, investors may be better able to balance these needs and avoid the worse of the brunt if rates rise, as expected.

Economic Expansions and Recessions
Rates are near historic lows but eventual increases could present challenges
 
  • Following a 30-year bull market in bonds, interest rates are near all-time lows. After adjusting for inflation, real yields on some fixed income investments are close to zero, which limits income generation.
  • Yields have started to move higher as economic growth has stabilized and the Federal Reserve has signaled that it will begin to normalize monetary policy.
  • Further economic improvement and eventual tightening, as well as a pick-up in inflation, could increase upward pressure on rates.
Discussion Slides
Interest rates and inflation
Correlations and volatility
Historical returns by holding period

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