In 2025, the role of bonds (^FVX, ^TNX, ^TYX) in an investment portfolio is dependent on an investor’s ultimate goals, with incentives ranging from one’s income and diversification to capital preservation.
Schwab Center for Financial Research Fixed Income Strategist Cooper Howard joins Wealth host Brad Smith to elaborate on his outlook on bond market investing, highlighting that bond allocation in relation to broader economic indicators varies by individual objectives.
With the Federal Reserve now forecasted to cut just two times in 2025, “there’s a lot of uncertainty and that could filter into the fixed income markets in terms of a lot of volatility,” Howard explains. “There’s a wide dispersion about what Fed officials believe.”
Howard also advises caution with high-yield corporate bonds because of low spreads, while anticipating a “soft landing” scenario for the US economy.
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