Developed market yields remain low

Sources: Bloomberg and Wells Fargo Investment Institute, as of September 30, 2021. For illustrative purposes only. Yields represent past performance and fluctuate with market conditions. Current yields may be higher or lower than those quoted above. Past performance is no guarantee of future results. Bonds are subject to interest rate, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. Although Treasuries are considered free from credit risk they are subject to other types of risks. These risks include interest rate risk, which may cause the underlying value of the bond to fluctuate. Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.

Key Takeaways

  • Developed market government bond yields fell back in the third quarter. They remain very low, thanks to ongoing central bank support coupled with lower growth and inflation expectations overseas than in the U.S.
  • U.S. bond yields climbed in the first half of 2021 supported by fiscal stimulus and successful vaccine developments.
  • We still expect yields to climb further in the fourth quarter, but consolidation in yields may occur at times.