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Advisor Playbook

Markets are complex. Give your clients clarity. Enhance your client conversations with our quarterly look at key market trends, reinforced with education and backed by the expertise of PIMCO.

Our View

We expect bonds to do well across a range of environments. Amid uncertainty, investors, especially those with meaningful cash allocations, should consider taking advantage of bonds’ attractive valuations and defensive properties.
Watch Brian Kyle, SVP & Lead of PIMCO's Advisor Solutions team, walk through timely charts that are supporting client conversations.

Yields Across Most Fixed Income Sectors Are High vs. Recent History

What the Chart Shows:

Current yields (solid bars) versus yields from over three years ago (shaded bars) across fixed income sectors. Current yields are much higher in every sector.

What it Means for Investors:

Yields are still near decade highs across most fixed income sectors. The combination of high starting yields and the potential for rates to fall creates an attractive outlook for a wide variety of bonds.

Today, yields are at a much stronger starting point when compared to Q4 2021

As of 31 March 2025. SOURCE: Bloomberg, PIMCO.Index proxies for asset classes displayed are as follows: Agency MBS: Bloomberg MBS Fixed Rate Index, Munis: Bloomberg Municipal Bond Index, HY Munis: Bloomberg HY Muni Bond Index, Core: Bloomberg U.S. Aggregate Index, HY Credit: Bloomberg U.S. Corporate High Yield Index, EM: JPMorgan EMBI Global, IG Credit: Bloomberg US Credit Index; Private Credit: Market estimates for yield.
* Securitized Credit computed as average of CLOs, CMBS, and ABS from JPMorgan and Bloomberg.
** Municipal yields are the taxable equivalent yield, adjusted by the highest marginal tax rate (40.8%). Unadjusted IG Muni index yield is 3.7% with a change of 264bps compared to 12/31/2021 levels, the unadjusted HY Muni Index yield is 5.3% with a change of 254bps compared to 12/31/2021 levels.
1The yield to worst is the yield resulting from the most adverse set of circumstances from the investor’s point of view; the lowest of all possible yields.

Higher Returns Have Historically Followed Higher Starting Yields

What the Chart Shows:

There is a 94% correlation between starting bond yields (blue) and forward returns (green), suggesting that future bond market returns closely follow starting yields.

What it Means for Investors:

With starting yields nearly two times higher than the average yield since 2010, investors could stand to benefit from attractive return potential in fixed income investments going forward.

Yield vs 5-year forward return

Past performance is not a guarantee nor a reliable indicator of future performance.
Chart is provided for illustrative purposes and is not indicative of the past or future performance of any PIMCO product.
As of 31 March 2025. SOURCE: Bloomberg, PIMCO. Yield and return are for the Bloomberg U.S. Aggregate Bond Index. It is not possible to invest directly in an unmanaged index.

Though Short-Term Returns Can Vary, Long-Term Returns Tend to Anchor on Starting Yields

What the Chart Shows:

As one’s time horizon grows, the range of returns narrows and moves towards the starting yield.

What it Means for Investors:

Despite the potential for near-term volatility, data suggests that current yields more consistently reward patient, long-term fixed income investors with returns near their starting yields as their time horizon grows.

Bloomberg U.S. Aggregate Return Distribution when starting yields are between 4-5%

Starting yields on bonds are a key indicator of potential future returns. Rachael Razzano, account manager, charts the importance of considering fixed income investments when yields are attractive, despite potential volatility, and the long-term benefits of staying invested in high quality bonds.
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