Q2 2026 | Fixed Income Update

We thought we would leverage this quarter’s Fixed Income update to include the most important questions investors have been asking, or should be pondering, along with our thoughts. If you have additional questions that you would like us to address, feel free to send them along! ‍

How have rates moved since the war in Iran began?

Rates have generally moved upward!

Rate volatility has been largely driven by war-related uncertainty, inflationary pressures from rising oil prices, and climbing global yields. Despite this turbulence, rates have remained range-bound, ebbing and flowing in response to shifting uncertainty.

We wanted to highlight the movements of two Treasurys that are indicative of the shape of the yield curve.

First, the two-year Treasury has risen from 3.40% and is currently trading above 3.80%. This is largely due to the market changing course on the future trajectory of interest rates – it was below 3.5% when an interest rate cut was being priced in and has risen to nearly 4% as the possibility of a hike increased. A sustained move above 4% would suggest markets are beginning to seriously price in the possibility of rate increases, rather than cuts. The 4% level on the two-year is a very important level to watch.

The 10-year Treasury has also risen since the start of the war, generally trading in the 4.30–4.40% range. It has ticked higher during periods of heightened uncertainty but has largely held below 4.50%. In our view, a sustained break above 4.5% would signal that rates are directionally biased higher — another threshold we will be watching closely.

Today (5/15/2026) the 2-year Treasury broke above 4% and the 10-year Treasury crossed above 4.5%. It remains to be seen whether yields can hold above these thresholds. Notably, the last time the 10-year Treasury traded at these levels was a year ago, May 2025, when it breached 4.5% before pulling back. We suspect volatility will remain present in interest rates — particularly until there is a resolution in the Iran war.

I have been hearing about bond issuance in the news – what does this mean?

As a reminder, the U.S. bond market is the largest debt market in the world and is larger in size than the U.S. stock market. New bond issuance is an ongoing process, and the size/demand of new issuances can offer insights on the conditions of the market as whole.

Year-to-date through April, U.S. corporate bond issuance has hit over $1 trillion — up about 28% versus last year. Given that last year was also very strong for new issuances, it’s exciting to watch this trend continue.

While the war has introduced volatility, credit spreads have stayed at tight historical levels, yields have remained in a digestable range range for markets, and demand for new issues is strong — allowing corporations to finance themselves efficiently, which can be supportive for earnings and growth. Notably, a majority of investment grade companies have maintained their credit ratings, with Moody’s and S&P registering more upgrades than downgrades this year, suggesting overall corporate balance sheets remain on solid footing. Taken together, these are encouraging signals for the broader market and economy.

Is it still a good time to buy bonds?

Despite the current uncertainty, we still believe it is a good time to lock in rates. Yields are well above the lows of the 2010s and COVID era, and higher starting yields have historically provided a reliable buffer against interest rate changes.

Uncertainty itself is argument for bonds! Bonds and their predictable coupon payments can offer a degree of predictability in uncertain times. While bond principal value can fluctuate based upon prevailing interest rates, they are typically structured to pay interest semi-annually at a set coupon rate and, if held to maturity, earn the rate that was locked in at the time of purchase. As we have mentioned before, we believe that locking in rates above 4% can serve as a meaningful contribution to your portfolio’s total return, while also helping you work toward your longer-term goals.

We hope this update is helpful, and please feel free to share it with your colleagues, family, and friends.

Thank you again for your continued vote of confidence in our work. If you have a friend or family member who would be interested in a no-cost portfolio review, please let us know.

Watch