Insights

CHARTS  |  JULY 2017
Who Said Rising Rates Were Bad for Bonds?
With the prospect of higher interest rates in North America, it's helpful to remember that rising rates aren't always bad for bonds.

Interest rates are on the rise, so should fixed income investors head for the exits? Not so fast. Basic bond math shows that in a rising rate environment, higher income usually offsets any capital losses. In fact, in each period between the U.S. Federal Reserve’s three most recent rate hikes, bond returns have been flat or positive. Although rates are on the rise, this will likely continue at a gradual pace, and core bonds should remain a key component of investor portfolios.