Weekend Reading: The Return of 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

If you’ve experienced the bond blues, reassuring news is on the horizon. While 2022 became the first year ever for bonds to end with a negative five-year annualized return, markets have now recalibrated, resulting in higher yields (and higher future returns).


A sunnier outlook: Put simply, what we’re seeing today is the outcome of holding on for the long term. In some cases, U.S. government-sponsored agency bonds currently yield about five percent. A year ago, that return would’ve required a high-yield market. This activity is setting the stage for greater competition between stocks and bonds.

With volatility comes opportunity: The upside of bond prices going down in years’ past is now higher expected future returns. However, this isn’t guaranteed. Amidst cooled inflation and less drastic interest rate hikes, it seems a smoother bond environment is here, but we ultimately don’t know what’s to come. What does appear as an opportunity for retirees today, though, is a multi-asset bond market approach that didn’t exist a year ago.

As a retiree, you are best positioned to benefit from rising interest rates, mainly because you are in a season of risk-avoidance and have reduced reliance on debt.