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%. Accompanying table provides yields by instrument as of the end of Q3 2021.
| Yield | |
|---|---|
| Emerging market fixed income | 4.83% |
| High yield | 4.04% |
| High yield municipal | 3.11% |
| Investment grade corporate | 2.13% |
| 10-year Treasury | 1.49% |
| 10-year Municipal | 1.01% |
| Developed market ex.-U.S. fixed income | 0.57% |
| Cash | 0.04% |
Sources: Bloomberg, FactSet, and Wells Fargo Investment Institute, as of September 30, 2021. 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 US 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.
Key Takeaways
- U.S. Treasury yields remain materially lower than investors have historically experienced.
- Diversifying income streams can potentially dampen portfolio volatility and reduce the probability of dramatic swings in the levels of income provided.