Fidelity Investments recently posted a "Q3 2022 Fixed Income Perspectives Video" featuring Julian Potenza, co-manager of Fidelity Limited Term Bond Fund, Fidelity Sustainable Low Duration Bond Fund, Fidelity Conservative Income Bond Fund, Fidelity Short-Term Bond Fund and a number of other bond funds. He "discusses another challenging quarter in the fixed income markets," and tells viewers, "Turning to the numbers, the sharp rise in yields drove another tough performance quarter in the bond markets. The US investment grade bond market, as measured by the Bloomberg Aggregate Bond Index, was down 4.75% in the quarter, while US Treasuries were down 4.35%. Investment grade corporates were down over 5%, while high yield outperformed down just 0.65%. Given the dramatic moves this year, how should investors be thinking about the fixed income markets at this point in the cycle?" Potenza continues, "To start, it is worth recognizing the significant repricing that has occurred this year. I often look at real interest rates or interest rates after expected inflation is removed to gauge the stance of monetary policy. In the U.S., five-year real interest rates rose from about 40 basis points at the start of the third quarter to just under 2% at the end. For context, that is almost 1% higher than the peak of the last tightening cycle and up almost 4% from the post-pandemic lows, of 4% adjustment in real interest rates is a major change to the economic ecosystem and much of the adjustment is fairly recent. It is likely enough to slow the more interest sensitive sectors of the economy, such as housing. While the Fed may well continue hiking to control the inflation situation. The adjustment in real rates suggests that the balance of risks between higher inflation and lower growth may start to tilt towards lower growth, which could raise the diversification value of bonds in your portfolio."

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