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Higher yields could mean more income and less volatility for fixed-income investors.
Since the beginning of 2022, yields have reset at higher levels. For investors, that means significantly more income than what they’ve received in the past. And because price and yield move in opposite directions, it also means these bonds are more affordable relative to recent history.
This income component is important because, over the long term, it can drive higher total return for bond investors. Higher income also provides a deeper buffer for market volatility. That buffer will be important to investors since we are expecting ongoing uncertainty while the Fed continues to fight inflation.