Fixed income in a yield-rising environment
8 min read 25 Oct 22
What a difference a year makes! It was not too long ago that fixed income markets were flirting with the “zero bound” range of interest rates and investors were in some cases required to pay to lend their money to governments and businesses. The amount of negative-yielding debt across the world peaked at US$18.0 trillion in 2020. Since then, a surge in inflation has pushed central banks to hike rates aggressively. Today the total amount of negative-yielding debt is close to disappearing as bond prices, which move inversely to yields, have collapsed.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.