Yields available as interest rates rise

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.

Key Takeaways

  • 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.