Foreign Bonds Outpace US Fixed Income in 2026

Investors in US fixed income markets have seen lackluster returns this year. The Vanguard Total Bond Market ETF, a proxy for government and investment-grade corporates, is up just 0.2% through August 27. However, investors who diversified into foreign bond markets have enjoyed more substantial gains.

The strongest performances came from riskier segments of the international market, although specific details on these are not provided in the source. The Federal Reserve's target rate is expected to remain unchanged at next month's FOMC meeting, but futures markets anticipate at least one hike by year-end.