Reflections & Resources

Why Bonds are Down and What it Means for your Investment Portfolio

August 10, 2022

For a long time, bonds have been considered one of the safer investments you can make. They tend to perform well when stocks struggle, and they offer a steady stream of income. But lately, bonds have been under pressure. Interest rates are rising, and that is bad news for bond prices.

What does this mean for the future of bonds in your investment portfolio? When it comes to bonds, there are a few things that you need to keep in mind.

First, remember that interest rates and bond prices move in opposite directions. This means when rates go up, bond prices go down. Why? When interest rates rise, investors are willing to pay less for a bond that pays a lower rate of interest than current prevailing rates. For example, let’s say you have Bond ABC that pays 5% interest and is currently worth $100. If interest rates rise to 6%, the value of your bond will fall to $94.44. This discount in price will affect the current market value of the bond, but only becomes a reality if the bond is sold prior to its maturity. This relationship between interest rates and bond prices is important to keep in mind when making investment decisions.
Second, don’t panic. While it is true that bonds are under pressure right now, they still offer some important benefits. For example, bonds can provide stability in a portfolio during periods of high stock market volatility. Additionally, bonds can offer attractive income potential, particularly for investors who are nearing or in retirement. As such, it is important not to make rash decisions about your bond holdings in times of market uncertainty.

While it is certainly true that interest rates have been on the rise in recent months, it is important to remember that this trend will not continue indefinitely. At some point, the Bank of Canada/Federal Reserve will change its interest rate direction and, as a result, bond prices will stabilize.

The bottom line is that bonds can be challenging to own in periods of interest rate increases, but they can still provide stability and liquidity for investors. Bonds may help to offset some of the risk in your portfolio when the stock market is volatile. For these reasons, it is important for many investors to have a mix of both stocks and bonds in their portfolio.

Recent Posts

Summer 2026 Newsletter – The Wagner Investment Management Team

As we move through summer 2026, it’s a great time to take a step back from the headlines and focus on the bigger picture of your financial plan.

Discover how evolving market dynamics are shaping the investing landscape, explore the lessons that Jevons Paradox may offer for energy markets and artificial intelligence, and learn practical ways to support the next generation through homeownership, tax planning, and financial education. Plus, gain valuable estate-planning insights on navigating the transition when children reach adulthood.

Let’s make this summer a season of perspective, preparation, and opportunity – helping you stay focused on your long-term goals while we continue to navigate changing markets together.

June 2026 Market Update – Middle East Tensions, Oil Price Swings, and Easing Energy Concerns

Geopolitical tensions in the Middle East remained a key influence on global markets during June. Developments involving the U.S., Iran, Israel, Gaza, and Lebanon contributed to periods of heightened uncertainty, particularly in energy markets. Concerns surrounding shipping through the Strait of Hormuz, a key global oil transit route, led to temporary increases in oil prices during the month. However, as tensions eased, oil prices retreated approximately 30 per cent from their June 3 intraday high, ending the month near where they finished in late February.

May 2026 Market Update – Strong Equity Gains, Oil Volatility, and Persistent Inflation Signals

Just prior to the start of May, the Bank of Canada, the U.S. Federal Reserve, and the European Central Bank all maintained their policy interest rates as inflationary pressures associated with higher energy prices continued to emerge.

April 2026 Market Update – Easing Volatility, Oil‑Driven Inflation Pressures, and Central Bank Policy Pause

Market performance in April occurred despite ongoing geopolitical uncertainty and elevated investor concerns surrounding global events. North American equity indexes rose between 3.5 percent and 15 percent during the month, bringing major U.S. indexes back into positive territory on a year-to-date basis. The TSX and NASDAQ both posted year-to-date gains of approximately 7.1 percent.

March 2026 Market Update – Heightened Geopolitical Risk, Energy‑Led Volatility, and Shifting Rate Expectations

Market movements in March were heavily influenced by geopolitical developments following military conflict involving the United States and Iran that began at the end of February. Military action began prior to the opening of trading on March 2 and continued through the month. During the first three weeks of March, North American equity indexes declined between approximately 4.5 and 9 per cent.

Markets reacted quickly at the beginning of March. Gold and oil prices rose sharply on the first trading day of the month. North American equity markets were relatively flat on March 2 before declining at the open the following day.

The information contained herein has been provided for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact your financial advisor.