By Salvatore Bruno via Iris.xyz
We all know the drill: the Fed raises interest rates, and the bond market falls. That’s an important equation to consider now that the decade-long era of historically low interest rates is slowly but surely coming to an end. But while bonds and the fixed income market may not be able to compete with US equities these days from a return perspective, they can still play an important role in portfolios, helping to dampen volatility and providing a much-needed income component to the more than 10,000 Baby Boomers who are retiring every day and depend on that income to fund their “golden years.”
None of that, however, changes the fact that today’s environment can be pretty challenging for anyone in the fixed income space. The 10-year Treasury is yielding less than 2.2%¹. The Fed seems determined to shrink its balance sheet and continue to hike interest rates. And the equities market is slowing after a long bull run, which has many retirees starting to worry that a bear market is waiting just around the corner.
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