Weekend Reading: Three Myths About the Bond Market

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

With interest rates creeping up over the past 18 months, what impact does that create for bonds in your portfolio?


First and foremost, you should know fact from fiction when it comes to the bond market, and three primary myths are explored here:

📌 Myth 1 – Safe bonds are risk-free: Longer-term bonds are not riskless, as their prices can be volatile when interest rates change. Even shorter-term bonds, like three-month Treasury bills, are not entirely risk-free, especially for those managing long-term liabilities.

📌 Myth 2 – Federal Reserve policy determines long-term interest rates: Factors like supply and demand for bonds, high debt levels, term premiums and inflation risk play a more significant role in long-term rates.

📌 Myth 3 – An aging population means lower bond yields: Recent research indicates that this relationship is not straightforward. Aging populations may lead to increased debt issuance by governments, potentially causing higher interest rates.

You don’t have a crystal ball to relay what will happen to the bond market in the coming months – and neither do we. Amidst the uncertainty, a diversified portfolio and comprehensive investment strategy are vital for financial peace of mind.