Our investment and economic outlook, August 2024

This month, we take a closer look at interest rates and the changed anatomy of bond returns. They’re simple enough dynamics: Interest rates rise, bond prices fall; interest rates fall, bond prices rise. But what happens when you factor in the income that bonds generate? The conditions at the start of an investment matter. And as the charts suggest, initial conditions were far more favorable to bond investors at midyear 2024 than they were at midyear 2021, underscoring Vanguard’s assertion that bonds are back!