Interest Rates and Market Expectations - The market had overly optimistic expectations for Federal Reserve easing, which were not supported by compelling data, leading to a return to equilibrium with anticipated rate cuts next year [2][3] - The 10-year Treasury yield has increased by more than 15 basis points, attributed to a more hawkish stance from Fed Chair Powell [3] Inflation and Investment Strategies - There is a belief that inflation risks are skewed to the upside for the next 6 to 12 months, suggesting a need for exposure to Treasury Inflation-Protected Securities (TIPS) [5][6] - TIPS currently offer a positive real return, making them an attractive investment option [5] Federal Reserve's Future Actions - It is unlikely that the Federal Reserve will implement another rate cut in December, with potential for one or two cuts in 2026 depending on economic data and inflation trends [6][7] Fixed Income Market Performance - The fixed income market is experiencing solid returns across various sub-asset classes, with international bonds yielding a total return of 9.5% year-to-date [8] - There is a renewed opportunity for investment in international bonds, particularly as the dollar weakens [9][10] High Yield Market Concerns - Caution is advised regarding high yield investments, particularly in the leveraged loan market, which may contain lower-quality assets [10][11]

Welcome back to Schwab Impact here at the Colorado Convention Center. Interest rates, they've been rising since Fed Chair Pal's more hawkish comments during last week's news conference. Kathy Jones is Schwab's chief fixed income strategist and joins us now.It's good to see you. >> Hi, Scott. >> What do you make of the back up in rates.>> You know, I think the market just got way over its skis and expectations for Fed easing. I'm not really sure why because the data weren't really that compelling. Um but now ...