Schwab Asset Management says bond investors should still care about income, but avoid reaching too far out on duration. Sticky inflation, oil price risk, and fiscal concerns could keep the 10 year Treasury yield near 4% to 4.5%.
2026 Mid Year Outlook: Taxable Fixed Income
Charles Schwab
Collin Martin
Research
16 Pages
Key Takeaways
Duration Stays Short: Schwab expects the 10 year Treasury yield to stay mostly between 4% and 4.5%, favoring below benchmark duration exposure.
Fed Patience Holds: Core PCE rose 3.3% year over year in April, supporting Schwab’s view that rate cuts are unlikely soon.
Credit Income Appeals: Investment grade corporate yields sit above 5%, while Ba rated bonds make up more than 55% of the high yield index.
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