• Following eight Fed rate hikes (so far) during the current cycle, and with unemployment in the U.S. at a multidecade low, yields across major fixed income asset classes have indeed moved up in 2018.1
  • The yield on the 10-year U.S. Treasury note, for example, is approximately 2.91% today versus just 2.40% in December 2017. The Bloomberg Barclays U.S. Aggregate Bond Index, the benchmark for a traditional fixed income portfolio, currently yields approximately 3.47% compared to 2.71% at year-end 2017.2
  • However, the significant interest rate moves that some investors have been waiting on for the past several years have yet to materialize. In August, for example, Goldman Sachs lowered its forecast for 10-year U.S. Treasury yields in December 2018 from 3.25% to 3.10% – which is still nearly 20 bps above its current yield.3
  • As 2018 comes to a close, we remain in what has been a multiyear low-rate environment for traditional fixed income assets.

1 Bureau of Labor Statistics, https://bit.ly/2ibnFLh.
2 Bloomberg, as of December 12, 2018. Investment grade corporate bonds are represented by the ICE BofAML U.S. Corporate Master Index; Emerging market bonds are represented by the J.P. Morgan EMBI; High yield bonds are represented by the ICE BofAML U.S. High Yield Master II Index; Senior secured loans are represented by the Credit Suisse Leveraged Loan Index.
3 Reuters, https://reut.rs/2QrYxWm.

The chart of the week and any accompanying data is for informational purposes only and shall not be considered an investment recommendation or promotion of FS Investments or any FS Investments fund. The chart of the week is subject to change at any time based on market or other conditions, and FS Investments and FS Investment Solutions, LLC disclaim any responsibility to update such market commentary. The chart of the week should not be relied on as investment advice, and because investment decisions for the FS Investments funds are based on numerous factors, may not be relied on as an indication of the investment intent of any FS Investments fund. None of FS Investments, its funds, FS Investment Solutions, LLC or their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any reliance on the chart of the week or other opinions expressed therein. Any discussion of past performance should not be used as an indicator of future results.