What Higher Bond Yields Mean for Markets in 2025

Long-term yields spiked after the election. Dominic Pappalardo, chief multi-asset strategist at Morningstar Investment Management, discusses why long-term yields spiked in the wake of the election, what's next for fixed-income in 2025, and how investors can take advantage of higher yields in their portfolios. 00:43 Why Did Bond Yields Rise in the Wake of the Election? 01:52 How Investors Are Thinking About Rising Bond Yields 03:01 What the Current Run-Up in Bond Yields Tells Us About the Markets 04:36 How Do Today’s Yields Compare to History? 06:18 Will the Flat Yield Curve Start to Steepen? 07:29 How Bond Yields Affect the Stock Market 09:09 How Long Can the Market Withstand a Higher Interest Rate Environment? 09:54 How Bond Yields Affect Mortgages 11:55 How Today’s Bond Yields Can Benefit Investors When Looking at Portfolio Construction 14:34 Economic Outlook 2025 Key Takeaways Read about topics from this episode. Postelection Deficit Concerns Fuel Jump in Bond Yields https://www.morningstar.com/bonds/post-election-deficit-concerns-add-fuel-jump-bond-yields Trump’s Tariffs: A Wild Card for the Markets in 2025 https://www.morningstar.com/markets/everything-is-table-how-companies-are-preparing-trump-tariffs Fed Sticks to Rate Cut Plans, for Now https://www.morningstar.com/stocks/fed-sticks-rate-cut-plans-now ‘Diversification Is Back’—Why 60/40 Portfolios Are Working https://www.morningstar.com/markets/diversification-is-backwhy-6040-portfolios-are-working What to watch from Morningstar. Yes, You Can Still Find Tax-Loss Harvesting Opportunities in 2024 https://youtu.be/Gz013cbTQNE?si=AHov4XmWNGe0NJLk A Simpler Medicare Part D Is Coming. Here's How It Could Save You Money https://youtu.be/NOFhCXK5jDo?si=NsenJVGFYpeNxRDc A Better Way to Use Leverage in Your ETF Portfolio https://youtu.be/IfG3K8ivh_I?si=G7yM1RoxT7CKbYIo Apple Earnings Are on Deck. Will Apple Intelligence Help Drive iPhone Sales? https://youtu.be/XXqOsYUoXZs?si=YAOxTDul97dltbpN Read what our team is writing: Sarah Hansen https://www.morningstar.com/people/sarah-hansen Follow us on social media. Facebook: https://www.facebook.com/MorningstarInc/ X: https://x.com/MorningstarInc Instagram: https://www.instagram.com/morningstar... LinkedIn: https://www.linkedin.com/company/5161/