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Opinion

Inflation Will Eat Your Bond Returns If You’re Not Ready

While bonds are less volatile than stocks, commodities, or cryptocurrencies, they are not without risk.
Inflation Will Eat Your Bond Returns If You’re Not Ready
Mandel Ngan/AFP/Getty Images
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Commentary

Bonds are typically considered a low-risk asset—although that perception shifted after the sharp increase in interest rates that began in 2022. People often refer to short-term U.S. Treasury bill yields as the risk-free rate. In reality, although bonds are less volatile than stocks, commodities, or cryptocurrencies, they are not without risk. Notably, the U.S. Treasury has never defaulted on its debt.

Tom Czitron
Tom Czitron
Author
Tom Czitron is a former portfolio manager with more than four decades of investment experience, particularly in fixed income and asset mix strategy. He is a former lead manager of Royal Bank’s main bond fund.