2021 and 2022 Have Been Brutal for Bonds
Two Year Treasury yields are now 1.61%, which is approximately 15x higher from where they were a year ago! The Ten Year Yield is now 2.1%, which is the highest we've seen since the pandemic. The Federal Reserve has not officially raised rates (we expect that official announcement later this week), yet the fixed income market has already adjusted significantly.
Remember, when yields rise, the prices go down. This is bad news for fixed income investors who have owned bonds over the last five quarters. In fact, the aggregate bond index was down about 1.5% in 2021 and so far YTD it is down about 4.7%. And if rates continue to rise, more pain could be coming. However, for money which has been parked in a money market earning roughly 0.0%, now is a much more appealing time to consider short term high quality bonds given the recent move we've seen. Some short term bonds funds I watch are now paying as much as 3.0% as a distribution yield, which is more than we've seen in so many years I can't even remember.
How does fixed income fit into your financial plan and investment plan? Call us at 734-681-7575 or schedule online today to have a discussion with your financial planner here at Peak Wealth. At Peak Wealth Management, we can help you Retire with Confidence.
NOT A RECOMMENDATION. PLEASE CONSULT WITH YOUR FINANCIAL ADVISOR BEFORE TAKING ANY ACTION. EDUCATIONAL PURPOSES ONLY.