How to get a 6% return in bonds this year, according to Guggenheim

After an awful year, a straightforward strategy has been shaping up for investors to get an estimated 6% return in the bond market, according to Guggenheim Partners.

The Federal Reserve’s rapid pace of interest rate hikes since March punished investors in both stocks and bonds, but the central bank’s efforts look to be paying off, at least on the inflation front.

That’s a big reason why Guggenheim now expects to see high-quality bonds return nearly 6% in 2023.

The team looked at this year’s starting yield of the benchmark Bloomberg U.S. Aggregate Bond Index, known as the “Agg,” and compared it with 1-year performance (see chart) over the past 20 years. It suggests the Agg could produce a near 6% total return in 2023, the best since 2008.

Guggenheim economist sees potential for a near 6% return this year for the benchmark “Agg” bond index.

Guggenheim Investments, Bloomberg

“The Fed’s aggressive tightening cycle drove a painful resetting of bond yields in 2022, but the upshot is that the central bank has put…

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