2026 Outlook: Treasury Bonds and Fixed Income

Charles Schwab

Kathy Jones, Collin Martin

Research

11 Pages

Charles Schwab’s expects 2026 to be another good year of returns for bond investors, but the range of potential outcomes is wide.

Date published: December 3, 2025

Key Takeaways

Expected Returns: Charles Schwab expects solid returns in fixed income markets in 2026, driven by central bank rate cuts in response to a weakening labor market. However, the bulk of returns will likely come from coupon income rather than price appreciation.
Yield Curve: The yield curve likely will remain steep due to the prospect of increasing supply in government, municipal and corporate bonds.
Areas of Opportunity: Fixed income investors should consider focusing on high-quality-credit issuers and an intermediate-term duration, on average. Treasury Inflation-Protected Securities (TIPS) and municipal bonds are potential areas of opportunity.
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