OneTrust Cookie Consent

Navigation

  • Skip to Content
  • Client Log In
  • Investor relations
  • Sustainability Institute
  • Subscribe
  • Contact us
  • Careers
  • Region
  • Go back to Main Menu
  • Client Log In
  • MSCI ONE
  • MSCI Client Support Site
  • Barra PortfolioManager
  • BarraOne
  • MSCI ESG Manager
  • MSCI ESG Direct
  • Global Index Lens
  • MSCI Real Assets Analytics Portal
  • RiskManager 3
  • CreditManager
  • RiskManager 4
  • Index Monitor
  • MSCI Datscha
  • MSCI Real Capital Analytics
  • Private i
  • Total Plan/Caissa
  • MSCI Wealth Manager (Fabric)
  • MSCI Carbon Markets
  • Go back to Main Menu
  • Region
  • China
  • India
  • Japan
Navigation

Navigation Menu

  • Our Clients
    • Go back to Main Menu
    • Our Clients
    • Asset Managers
      • Featured

        Insights on MSCI One
    • Asset Owners
      • Featured

        Institutional Client Designed Indexes (iCDIs)
    • Banks
      • Featured

        Total Portfolio Footprinting
    • Corporates
      • Featured

        ESG Trends to Watch
    • Hedge Funds
      • Featured

        Factor Models
    • Insurance Companies
      • Featured

        Total Portfolio Footprinting
    • Wealth Managers
      • Featured

        Visualizing Investment Data
  • Our Solutions
    • Go back to Main Menu
    • Our Solutions
    • Analytics
      • Go back to Our Solutions
      • Analytics
      • Analytics Overview
      • Risk Management
      • AI Portfolio Insights
      • Multi-asset Class Factor Models
      • Quantitative Investment Solutions
      • Fixed Income Analytics
      • Portfolio Management
      • Crowding Solutions
      • Regulatory Solutions
      • Managed Solutions
    • Climate Investing
      • Go back to Our Solutions
      • Climate Investing
      • Climate Investing Overview
      • Featured

        Implied Temperature Rise
      • Featured

        Trends 2025
      • Biodiversity
      • Carbon Markets
      • GeoSpatial Asset Intelligence
      • Portfolio Sustainability Insights
      • Real Estate Climate Solutions
    • Sustainable Investing
      • Go back to Our Solutions
      • Sustainable Investing
      • Sustainable Investing Overview
      • Featured

        Trends 2025
      • ESG Fund Ratings and Climate Search Tool
        • Featured

          ESG and Climate Funds in Focus
      • ESG Ratings
        • Featured

          What is ESG
      • Impact Solutions
        • Featured

          Role of Capital in the Net-Zero Revolution
      • Sustainability Reporting Services
      • Sustainability and Climate Regulatory Toolkit
        • Featured

          Role of Capital in the Net-Zero Revolution
    • Factor Investing
      • Go back to Our Solutions
      • Factor Investing
      • Factor Investing Overview
      • Featured

        MSCI Japan Equity Factor Model
      • Equity Factor Models
      • FactorLab
      • MSCI FaCS
      • Factor Indexes
    • Fixed Income
      • Go back to Our Solutions
      • Fixed Income
      • Fixed Income Overview
      • Fixed Income Analytics
      • Fixed Income Indexes
    • Private Capital
      • Go back to Our Solutions
      • Private Capital
      • Private Capital Overview
      • Featured

        Private Capital Benchmarks
      • Private i
      • Total Plan Manager (formerly Caissa)
      • Emissions Footprinting
      • Private Capital Indexes
      • Private Company Data Connect
    • Real Assets
      • Go back to Our Solutions
      • Real Assets
      • Real Assets Overview
      • Featured

        Real Estate Market Size
      • INCANS
      • Index Intel
      • Portfolio Services
      • Property Intel
      • Private Real Assets Indexes
      • Real Capital Analytics
    • Wealth Management
  • Indexes
    • Go back to Main Menu
    • Indexes
    • Featured

      Index Education
    • Featured

      Underlying Exchange Traded Products
    • Indexes Overview
    • By Category
      • Go back to Indexes
      • By Category
      • By Category Overview
      • Climate
      • Market Cap
      • Fixed Income
      • Client-Designed
      • Sustainability
      • Factor
      • Thematic
        • Featured

          Thematic Exposure Standard
      • Private Real Assets
      • Private Capital
    • Tools
      • Go back to Indexes
      • Tools
      • Tools Overview
      • Index Monitor
      • MSCI Index API
      • MSCI IndexMetrics®
      • Index Data Modules
      • Equity Index Constituents
      • Fixed Income Index Constituents
      • Index Profile Tool
      • Direct Indexing
    • Resources
      • Go back to Indexes
      • Resources
      • Resources Overview
      • Communications
      • Education
      • Equity Factsheets
      • Derivatives
      • Methodology
      • Performance
      • Regulation
  • Research & Insights
    • Go back to Main Menu
    • Research & Insights
    • Featured

      Navigating Uncertainty: Tariff Implications
    • Featured

      In Focus
    • Research & Insights
      • Go back to Research & Insights
      • Research & Insights
      • Research & Insights Overview
      • Carbon Markets
      • Climate
      • Equities
      • Factor Investing
      • Fixed Income
      • Multi-Asset Class
      • Private Capital
      • Real Estate
      • Sustainability
    • Events
      • Go back to Research & Insights
      • Events
      • Events Overview
      • Featured

        Upcoming climate events
      • On Demand
  • Discover MSCI
    • Go back to Main Menu
    • Discover MSCI
    • About Us
      • Featured

        2022 Annual Report
    • Technology
      • Go back to Discover MSCI
      • Technology
      • Technology Overview
      • Data Explorer
      • Developer Community
      • Technology and Data
    • Corporate Responsibility
      • Go back to Discover MSCI
      • Corporate Responsibility
      • Corporate Responsibility Overview
      • Enabling Sustainable Investing
      • Environmental Sustainability
      • Governance Practices
      • Social Practices
      • Sustainability Reports and Policies
    • Inclusion & Belonging
    • Media Room
    • Our Leadership
      • Featured

        Henry A. Fernandez
    • Recognition
  • Client Log In
  • Investor relations
  • Sustainability Institute
  • Subscribe
  • Contact us
  • Careers
  • Region
  • Go back to Main Menu
  • Client Log In
  • MSCI ONE
  • MSCI Client Support Site
  • Barra PortfolioManager
  • BarraOne
  • MSCI ESG Manager
  • MSCI ESG Direct
  • Global Index Lens
  • MSCI Real Assets Analytics Portal
  • RiskManager 3
  • CreditManager
  • RiskManager 4
  • Index Monitor
  • MSCI Datscha
  • MSCI Real Capital Analytics
  • Private i
  • Total Plan/Caissa
  • MSCI Wealth Manager (Fabric)
  • MSCI Carbon Markets
  • Go back to Main Menu
  • Region
  • China
  • India
  • Japan

Main Search

Popular searches:
ACWI Research ESG Factor Investment Insights Gallery Asset Owners
Might interest you:
Bond Performance in 2023: A Midsummer Reflection

Extended Viewer

 

Bond Performance in 2023: A Midsummer Reflection

 

Andy Sparks
July 26, 2023

There’s good news and bad news for bond investors this year. The good news is that year-to-date U.S. returns (through July 24) were positive.

But the bad news is twofold. First, inflation was also high, and Treasurys registered negative after-inflation performance. Second, in the race against equities, bond performance paled in comparison to the 20% gain in the U.S. equity market.

Opportunities and risks

Some investors may see this year’s relative underperformance of bonds and wonder whether there may be opportunity. Real bond yields continue to be high relative to the 10-year average. And by some historical measures, bond-market valuations look low relative to equity valuations.

There are risks to adding to bond allocations, even if they look attractive, however. Potential risks include:

  • Higher inflation/aggressive Federal Reserve. Perhaps a diminished concern given recent reported declines, but inflation could still surprise by remaining high and compel the Fed to keep rates higher, for longer.
  • Debt overhang. The U.S. Congressional Budget Office projects very significant increases in U.S. debt issuance in coming years and decades.1
  • Foreign buyers. Despite a significant expansion in net issuance of Treasurys between January 2022 and May 2023, foreign holdings of these instruments fell, according to Treasury Department and Federal Reserve data. A continuation of this trend would dampen future demand for bonds.

Summ(er)ing-up

As we head into the dog days of summer, it may be useful to look back to last year’s bond performance, which serves as a stark reminder that returns can be strongly negative. Important risks are still present in the current bond market, but opportunities may also be present.

Bonds lagged equities

Returns as of July 24, 2023, and inflation as of June 2023.

Bonds cheapened relative to equities

Data as of June 30, 2023.


1 “The 2023 Long-Term Budget Outlook.” U.S. Congressional Budget Office, June 28, 2023.

Related content

Macro Scenarios: Resilient US Economy but Downside Risks Loom

Investor sentiment has improved since we last wrote on macroeconomic scenarios in the midst of the banking turmoil.

Explore more

Markets in Focus: Looking Beyond the Rate Hikes

Historically, a U.S. rate-hike pause or pivot saw all factors but momentum outperform in the six months following the last rate hike, while communication services, consumer staples, financials, health care and utilities did well.

Read more

The Russia-Ukraine War and the Markets: One Year Later

While the direct market impact of Russia’s invasion has lessened over time, there have been longer lasting effects that have exacerbated investor concerns around inflation, rising rates and central bank actions around the globe.

Learn more

msci logo
  • Terms of Use
  • Legal
  • Modern Slavery Statement
  • Privacy notice
  • Index regulation
  • Locations
  • Cookies
  • Use of ISO standards
  • Site map
Subscribe Contact us
© 2025 MSCI Inc. All rights reserved

UtmAnalytics