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Bite Sized Insights – 100 Year Flood for Bonds

Bite Sized Insights – 100 Year Flood for Bonds

| October 03, 2022

It’s easy to lose sight of how profound some of the changes have been in the fixed income markets.

As you can see from the chart below, bonds are having the worst year since the 1970’s.

The red numbers are the peak to bottom loss for each year, and the solid grey bars are what the bonds ended up with interest for the year. 

3% was about the average annual loss, with positive returns in the past 42 or 46 years.

Over the past 3 years, they were up 9%, 8%, down 2%, and now down 12%.

Does this mean bonds should be sold?  Most likely not.  In many cases, the forward yield on the bonds today has improved to what could only be dreamed of just a year ago. For example, we are seeing many issues earn well north of 5-6%, many are even tax-free.

Thanks for looking, and we’d love to hear from you if you want to brainstorm around your own situation.

Your ISC Team