Vanguard's Economic and Market Overview
Fixed income continues to face headwinds going forward
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Bond prices continue to fall in the month of September. Inflation pressures and higher yields, triggered by higher rates on government bonds globally, have contributed to lower
prices overall.
We continue to see longer-term bonds being hit the hardest both in the three-month and the YTD. While lower prices may signal an alert to investors, the higher yields per dollar
invested may result in higher income returns through interests' payments in the longer run.
TIPS returns remain negative even though inflation continues to remain high. Expected inflation is now lower than current inflation and the rise in interested rates have contributed
to current performance.
Domestic fixed income market returns as of September 30, 2022 (%)
Credit quality
U.S. fixed income
-0.6
-4.3
-4.3
-4.9
-13.1-12.9
-12.9 -12.8
Treasuries
3 months
YTD
Government
1-year
-14.7 -14.1
-18.1-17.9
Maturity
-2.3
-4.9
-6.4 -7.0
-9.6
-13.6 -13.8
-26.6
Investment-grade
Credit
High yield
Corporate
Short-term
Treasuries
Intermediate-term
Treasuries
-28.8
Long-term
Treasuries
Inflation-sensitive fixed income
-2.6
-4.0
-2.9
-5.1
-11.6
-13.6
Short-Term TIPS Intermediate-Term
TIPS
Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
Source: Bloomberg.
Treasuries, government, investment-grade credit; high-yield (Bloomberg U.S. Treasury/Government/Credit/Corporate High-Yield Indices); short-inter-long-term Treasuries (Bloomberg U.S. 1-5/5-10/Long Treasury Indices);
short-term TIPS (Bloomberg U.S. Treasury 0-5 Year Inflation-Protected Index); intermediate-term TIPS (Bloomberg U.S. Treasury Inflation-Protected Index).
For institutional use only. Not for distribution to retail investors.
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