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By Gerald Wong, CFA •
15 Nov 2026
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Higher yields improve bonds’ income potential, but inflation, Fed policy and interest-rate risks remain key to assessing their attractiveness.
Beansprout Pro in Brief
- Higher starting yields offer more income and a greater cushion against falling bond prices. However, a higher yield alone does not make a bond an attractive investment.
- The Fed’s October meeting reinforced the possibility that interest rates could stay high. The path of inflation remains crucial to whether rates eventually fall or rise further.
- Bonds can respond very differently to interest-rate changes. Longer dated bonds offering larger gains when yields fall can also face steeper losses if yields rise.
- The Democratic victory in the US midterm elections adds uncertainty around government spending, taxes and business incentives. Its lasting impact will depend on how policy changes affect inflation, economic growth and corporate earnings.
- We examine what this means for our bonds, which bond investments deserve closer attention, and the conditions that would prompt us to change our positioning.
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