Don’t Overlook the Income Side of Fixed Income

Morningstar · Dan Lefkovitz · 2026-10-28 11:00 UTC

Amid bond market tumult, elevated yields are contributing to returns and offering investors a nice income stream.

Amid bond market tumult, elevated yields are contributing to returns and offering investors a nice income stream.

You’d think the performance numbers for Morningstar’s fixed-income indexes would be worse. Bond market turmoil has captured headlines in 2026. Inflation, interest rate hikes, and debt fears have pushed US Treasury yields to levels not seen since the early 2000s. Artificial intelligence-related borrowing is a growing concern.

Yet the Morningstar US Core Bond Index is down less than 3% for the first three quarters of the year, and losses across fixed-income asset classes aren’t exactly devastating. October has even seen a performance uptick.

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