What Does Interest Rate Volatility Mean for Bond Investors?

Fixed Income Chart of the Month: April 2023

When interest rates are volatile, it can be risky for investors to time the market. Recent higher yields have increased the attractiveness of fixed income investments; however, it has also resulted in increased levels of interest rate volatility that the market hasn’t seen since the Great Financial Crisis. A disciplined and fundamental investment approach that takes advantage of the current interest rate landscape can help mitigate negative performance impacts on an investor’s fixed income portfolio.

U.S. Treasury Rate Volatility Reaches Highest Levels Since the Great Financial Crisis

Source: Bloomberg as of 03/31/2023.

  • Higher yields have increased the attractiveness of fixed income investments but the path to higher yields has resulted in increased levels of interest rate volatility that the market hasn’t seen since the Great Financial Crisis.
  • Higher duration fixed income investments have experienced larger price movements from interest rate changes compared to shorter duration fixed income investments.
  • A patient fixed income investment approach that takes advantage of the current interest rate landscape can help mitigate negative price impacts on an investor’s fixed income portfolio.

Learn more about SBH’s Fixed Income Strategies.

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