With the Fed’s rate decisions looming, it’s easy for investors to feel pulled in every direction. Recent bond underperformance and volatility have also weakened confidence in fixed income. Looking at rate sensitivity, it tells an interesting story with a 1% decline in rates that could generate an estimated 20.5% return for 30-year Treasuries, while a 1% increase could produce roughly a -10% return. The risk-reward profile looks particularly compelling. Most other fixed income classes are far less sensitive, with several still offering positive returns even if rates rise.
Source: Guide to the Markets; Total return, assumes parallel shift in yield curve
This graph was produced by Lucas Juery, CFA, CFPⓇ and is not intended to provide financial advice.
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