Bonding Over Bonds: A fed hike, 20-year-high yields, and why the starting point matters
ALLYSON KRAUTHEIM, PORTFOLIO SPECIALIST JIM JACKSON, CHIEF INVESTMENT OFFICER 05-Oct-2026
October 5, 2026
Intermediate-term bond yields reached their highest level in more than 20 years. The Federal Reserve (the Fed) raised interest rates in September, following higher inflation readings, and markets are now pricing in additional hikes for the rest of the year and into next year. While economic growth has remained robust and employment fairly stable, price pressures have persisted. Thesharp rise in yields weighed on bond prices and fixed income performance.
Portfolio Specialist Ally Krautheim sits down with Victory Income Investors’ Chief Investment Officer Jim Jackson to break down what’s really driving yields higher. They cover why long-term inflation expectations and the federal deficit are not the primary drivers and what they believe is behind the move instead: expectations for further Fed hikes, strong growth lifting real rates, and AI-related capital spending competing for each additional dollar. They also explain why today’s starting point for fixed income looks different than it did a decade ago and how this could be an attractive entry point for investors.
