But in recent quarters, we have witnessed a dramatic shift higher in interest rates, a move that investors should not fear but embrace. In addition to the rise in nominal interest rates, we have also experienced a similar increase in real interest rates (rates adjusted for inflation). Granted, the journey to higher yields has been painful to bond investors. When calculating fixed-income returns for most bonds, there are two components: price return and income return. As an example, the Bloomberg Aggregate Bond Index posted a price return of -15.3% and an income return of +2.3%.

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Persons: Bonds, Taylor Swift Organizations: Istock, Getty, Treasury, Bloomberg, Bond, Federal