Interest rates moved higher in the third quarter, and fixed income investors with long- term investment horizons might say, “It’s about time.” Why? (1) Bond interest delivers an important, ongoing income stream, (2) is important for wealth preservation, and (3) can be a significant element of fixed income returns.
The economy picked up momentum over the second quarter as the impact of the Trump tax cuts and regulatory relief took effect.
A changing sentiment is enveloping the bond markets, spooking investors. The 10- year Treasury began 2018 at 2.40%, below its 2017 March high of 2.63% (source: Bloomberg). This year its yield moved as high as 2.95% on 2/21/18, but finished the quarter at 2.74%.