Bar graph compares key yields of various fixed income instruments and cash. Y-axis: instrument type; X-axis: Yield to worst (%).
The WFII long-term inflation expectation equals 2.25%. Accompanying table provides yields by instrument as of the end of September 2022.
|Emerging market fixed income||8.65%|
|High yield municipal||6.03%|
|Developed market ex.-U.S. fixed income||2.14%|
Bloomberg U.S. Corporate High-Yield Bond IndexBloomberg U.S. Corporate High-Yield Bond Index covers the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market.
JPMorgan GBI Global ex-US Index (Unhedged) in USDJPMorgan GBI Global ex-US Index (Unhedged) in USD is an unmanaged index market representative of the total return performance in U.S. dollars on an unhedged basis of major non-U.S. bond markets.
JPMorgan EMBI Global Index (USD)JPMorgan EMBI Global Index (USD) is a U.S. dollar-denominated, investible, market cap-weighted index representing a broad universe of emerging market sovereign and quasi-sovereign debt.
Bloomberg U.S. Municipal High Yield IndexBloomberg U.S. Municipal High Yield Index measures the non-investment-grade and nonrated U.S.-dollar-denominated, fixed-rate, tax-exempt bond market within the 50 United States and four other qualifying regions (Washington, D.C.; Puerto Rico; Guam; and the Virgin Islands). The index allows state and local general obligation, revenue, insured, and prerefunded bonds; however, historically, the index has been comprised of mostly revenue bonds. The U.S. Municipal High Yield Index is a stand-alone index with no crossover into other Bloomberg taxable Indexes, such as the U.S. High Yield Index.
Bloomberg U.S. Corporate Bond IndexBloomberg U.S. Corporate Bond Index measures the performance of the investment-grade corporate bond market.
Bloomberg U.S. Treasury Bills (1–3 Month) IndexBloomberg U.S. Treasury Bills (1–3 Month) Index is representative of money markets.
Sources: Bloomberg and Wells Fargo Investment Institute, as of September 30, 2022. For illustrative purposes only. Emerging Market: J.P. Morgan EMBI Global Index, High yield: Bloomberg U.S. Corporate High Yield Bond Index, High yield municipal: Bloomberg U.S. Municipal High Yield Index, Investment-grade corporate: Bloomberg U.S. Corporate Bond Index, Developed Market ex-U.S.: J.P. Morgan GBI Global Ex U.S. Index, and Cash: Bloomberg U.S. Treasury Bills (1–3M) Index. Yields represent past performance and fluctuate with market conditions. Current yields may be higher or lower than those quoted above. An index is unmanaged and not available for direct investment Past performance is no guarantee of future results. See “Index Definitions and Asset Class Risk Disclosures” link above for index definitions.
Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates. High-yield fixed-income securities are considered speculative, involve greater risk of default, and tend to be more volatile than investment-grade fixed-income securities. Foreign investing has additional risks including currency, transaction, volatility and political and regulatory uncertainty. These risks are heightened in emerging markets.
- Many fixed-income asset classes, including cash, are yielding more than our longer-term inflation expectation.
- Diversifying income streams can potentially dampen portfolio volatility and reduce the probability of wide swings in income levels.