Yield Talk: Monthly Bond Market Update

Hello, and welcome to Yield Talk. This is our monthly bond market update, where we talk about all things bond market. We provide our guidance on the direction of interest rates. We try to cover some educational aspects and maybe some risks and opportunities for all of you. If you're new to this program, this is something that we do every month, the second Thursday of each month. And we just try to provide our outlook on what's going on and try to demystify everything that's going on in the bond market. My name is Colin Martin. I'm a fixed income strategist with the Schwab Center for Financial Research. I cover all aspects of the bond market with a focus on the taxable credit markets, specifically corporate bonds. And I'm joined today by Cooper Howard.

So, Cooper, how about you give us a little background on you? Yeah, thank you, Colin. Thank you for everybody for dialing in this morning. So, again, my name is Cooper Howard. And kind of if Colin's Batman, I'm Robin, or if I'm Batman, Colin's Robin. So, we do one and the same job. So, I'm a fixed income strategist. I'm a fixed income strategist as well. I've been here at Schwab for about 17 years now. And my area of expertise, kind of my area of focus is specifically on the municipal bond market. But as part of that, we'll also cover what's going on with treasury rates, what's going on with a lot of different products, a lot of different investment types. So, that's a little bit about me. Okay, that's great.

I think that's a good primer on how we'll kind of approach this webcast because I know we'll get into the muni market that you focus on. I'll talk a little bit about corporate bonds. I'll kick it off with a big picture question, Cooper. And I think this is really important to kind of lay out the lay of the land right now. It's been an interesting few months. Treasury yields have risen sharply since mid-September. And I think that probably caught a lot of investors off guard, especially because it coincided with the Fed rate cut back in the middle of September. In fact, it was the first rate cut of this cycle after the Fed hiked rates aggressively beginning in the beginning of 2022. So, walk us through what happened here and why we saw yields rise so much.

Yeah, I think that's a great point to start on. And one of the things that I often come across when I speak to clients is just the misconception that if the Fed's going to cut interest rates, that's going to cause all rates to decline. And I love this chart here because it shows that that's not necessarily what happens. And since September 16th, that's actually not what happened. If you look at it, the Fed cut interest rates by 50 basis points. That's short-term rates that they have direct influence over. Now, longer-term yields, like the 10-year Treasury, which is shown here, that actually went up about 80 basis points. So, that's an important thing to note is that the longer part of the yield curve, it tends to be driven more off of expectations about inflation, expectations about growth, kind of just the overall direction of the economy.

And if you really look at what had happened since that September 16th low in the 10-year Treasury and since the Fed cut interest rates by 50 basis points, the economy has actually proven to be a little bit more resilient than originally expected. So, this is an indicator that we like to watch, and it's an economic surprise indicator. And it's really something that says not necessarily where exactly is the data headed, but is it better or worse than what was originally expected? Because our colleague, Lizanne Saunders, she really likes to point out that that's an important point in investing. It's not necessarily the level of it. It's is it better or worse than where it was. And this shows that the economic data since that September low had actually been better than expected.

If you look at a lot of different metrics, you can see that GDP, the overall health of the economy, that's been running around 3%. If we look at retail sales, that's kind of the health of the consumer. That was better than expected. We also saw the September CPI report. That showed that inflation was trending down a little bit. Since then, we've gotten some new CPI reports, new inflation reports. That show maybe things have stalled out a little bit. But looking back, you also see that the labor market had shown some signs of improvement. We continue to add jobs. The unemployment rate is down to about 4. 1%. Notably, the most recent labor market report in October was a little distorted because of what had happened with the hurricanes in North Carolina and Florida.

So it's kind of one that we have to look through a lot of that noise. Maybe throw it out a little bit. But really, that's something. It has been notable is that the economy has held up much better than expected. But we all know that the big event last week was the election. So that's kind of shifted a little bit of our thinking. And Colin, do you want to kind of discuss how that shifted our thinking, how things have kind of changed since the election has occurred? Yeah, it's a great transition, Cooper. And our thinking has changed a little bit. If we build on what you just talked about, the stronger economic momentum we've seen, the economic resilience, we saw a continuation of that move higher in treasury yields following the election results.

So you can see that on this chart here where we look at the various tenors of the treasury market. So we start with treasury bills on the left, so a one-month, a three-month, a six-month. And as you move from left to right, you get to longer maturity treasuries. And you can see that short-term treasury bills haven't really moved much. You actually see short-term T-bills, T-bill yields down a little bit with the six-month yield up barely. And then as you get to— The two-year and beyond, you actually see higher yields post the election. And these yields are as of yesterday's close. I think this is really interesting. There's two things I want to focus on with this chart. The first is it shows how different parts of the market react to different things that are going on at any given time.

And what this shows us is that short-term interest rates are much more related to changes in the Fed funds rate in the here and now, as opposed to expectations for what might happen down the road. So even though when we look at what happened with the election and what our expectation is, we think inflation is probably going to stay sticky and then maybe even get higher once proposed policies come into place. If you've been following what's been going on following the election, that shouldn't come as much of a surprise. That's kind of the key theme we're hearing now with proposed tax cut extensions or maybe even more tax cuts, tariffs, and then changes in the future. So that's why we've seen those changes to immigration policies.

When we look at those, we think the ultimate impact should be higher inflation. So that's why we've seen those longer-term yields move a little bit higher, where if inflation is expected to be higher over the long run, long-term yields have drifted higher to compensate for that. Where if we look at those short-term yields, like a one or three or six-month T-bill yield, you can see those haven't really risen like that because those are influenced more by the Fed funds rate in the here and now. And we talk about what those potential inflation rates are. We talk about what inflationary results might be. That's down the road because we don't know what policies will get enacted. We don't know how long it will take for the impacts to actually make their way into the economy and then what the magnitude of those impacts are.

But what we can see from this chart here is that the expectation is likely to be somewhat inflationary. So down the road, that can have an impact on Fed policy. But especially with those short-term T-bill yields, they're likely to really just track the Fed funds' changes in the here and now. So let's build on that, Cooper, and talk about Fed policy. In that first chart that you had, you alluded to the rate cut back in September, the 50 basis point rate cut. The Fed cut again last week by another 25 basis points. And I think there's a lot of confusion about the why behind these potential rate cuts. One, based on the fact that yields have been rising despite the rate cuts.

Two, based on the idea that inflation is proving to be a little bit stickier than we expected and maybe a lot of market participants expected. So can you kind of walk through why they cut rates again last week? And then, more importantly, and more importantly for the markets, what our expectation is for Fed policy down the road? Yeah, I think that's a great segue. And you're right; it was a very, very busy week for us last week. We had the election. We also had the Fed meeting. I think what is notable is that Fed has a dual mandate, is that they have a dual mandate of stable prices and maximum employment. With inflation, stable prices moving down to a more reasonable 2% target that they're hoping for, it has stalled out a little bit.

But with that moving down overall, they want to prevent less softness in the labor market. Now, I discussed this a little bit earlier, that overall the labor market is showing a little bit of a mixed picture in terms of what's occurring. If you step back and you take a broader view on what's happening, the number of jobs that the economy has been adding has been trending lower. You can see this. This is the nonfarm payroll report. It's one of the highly touted reports that we closely follow. It comes out every month at the beginning of the month. And it's a snapshot of what's happening with the labor market as a whole. One of the things that you might see come from this, that you may be more familiar with, is just the overall unemployment rate.

That's something that widely gets quoted in the media. But as you see, that number of jobs that the economy has been adding, again, it has been trending lower. So the Fed wants to prevent that from moving significantly lower. They don't want to see a significant deterioration with the labor market overall with the economy as a whole. So in terms of what it means for where is Fed policy going to go, yes, we know that they just cut rates by 25 basis points. Going forward, our expectation is that the destination is still going to be lower for them. We would expect that they would continue to cut interest rates, but probably at a slow and methodical pace right now.

Right now, if you look at what the market is betting on, they’re betting at about an 80% probability that they are going to cut again in December. Now, those probabilities shift around quite a bit because the Fed is data dependent. So as the data comes in on where the health of the economy is, what the outlook for inflation is, what the outlook for the labor market is, those probabilities shift around quite a bit. But at this point, it does appear that the market is currently betting that we’re going to get another rate cut in December. And then we’re projected to have a few more rate cuts into 2025. So again, the destination is lower interest rates for the Fed funds rate, but how much lower, that's still something that's up for debate.

So one of the things that we like to watch is what's the terminal rate? What's the end point to where eventually, once the Fed is done cutting interest rates in this cycle, where will we end up? And as you can see, that terminal rate has moved up a little bit. So it was in, say, the 3% range. Right now, we're now at about the 3. 75% to 4% range in terms of where we might end up. So I think one of the other things that we've seen since that September low is the economy continues to be a little bit more resilient. And then the outlook of the election, there's just a lot of unknowns that we would think that they might lend towards higher inflation. Kind of the balance of risks is for higher yields.

So ultimately, that means that the Fed's probably not going to cut as much as originally expected, and that's what the market's betting on right now. So Colin, I loved how you mentioned that there are different tenors of the yield curve. One impacts other things, or different parts of the yield curve are impacted by different things. But given our outlook on what's changing, what's changed since the election, what's changed with Fed policy, what is it that we're suggesting clients do right now? I think that's the bottom line on this. We talk a lot about where do we think rates may go, what do we think the Fed's doing, what do we think the economy's doing. But help us bring it home a little bit and say, well, what does this all mean to investors?

Yeah, let's bring it home. I like how you phrased it there. I think this is really important because our outlook has changed a little bit. So if anyone's watching or half paying attention, pay attention now because I think this is important, we have shifted our stance about what we're suggesting investors should do in the current environment. And just as a quick refresher on how we've been approaching the bond market over the past few years, after or as and after the Fed hiked rates so aggressively beginning in 2022, we started to suggest investors consider more intermediate or long-term yields or bonds in moderation to lock in yields with more certainty. So for most of 2023 and probably for half of this year at least, we were suggesting an extended duration general positioning.

And when we say that, we're talking about considering intermediate or long-term bonds to lock in yields with certainty, mainly to mitigate the potential reinvestment risk once the Fed began its rate-cutting cycle. And so we've been talking about that for a while. Even when the Fed was at upper bound of 5. 5%, our concern was that over time, as inflation moderated, as the labor market cooled, we would have expected the Fed to cut rates down to the 3. 5% or 3% or maybe below 3% level that was consistent with previous rate-cut cycles. When the 10-year Treasury yield fell at the end of the summer and it touched 3. 6%, we basically revised that guidance a little bit. And the risk-reward balance of considering intermediate-term bonds just didn't make as much sense anymore.

Well, now here we are, where yields are back up to what we previously thought were attractive levels, but we're a little bit cautious. Mainly for the reason Cooper just mentioned, the idea that the Fed's terminal rate is expected to be a lot higher than we initially expected. So that reinvestment risk is probably a lot lower than we initially thought. What the floor is for where those short-term yields ultimately ends up I think is going to be a lot higher. So our outlook has changed where we're suggesting investors consider a benchmark or even a below-benchmark, or preferably a below-benchmark average duration. And when we talk about benchmark or below-average duration, we're talking about the Bloomberg U. S. Aggregate Bond Index. It's the benchmark index for the investment-grade, high-quality domestic bond market.

It's mostly U. S. Treasuries, investment-grade corporates, and agency mortgage-backed securities. The average duration of that index is around 6, 6. 2 to be precise. So we're suggesting investors focus on an average duration close to that benchmark or even lower. Now when we talk about lower or even benchmark, it really depends on what your time horizon is. What your risk tolerance is. If six years sounds like a long time for you, then maybe you go even lower. But our concern about considering longer-term bonds in an environment where the risk to yields is to the upside is that prices fall. Because the standard relationship with bond prices and yields is that they move in inverse directions. So if yields rise, which we're worried that they can, that can pull prices down.

And the longer the maturity, the longer, the larger the price decline. So we're suggesting a benchmark or below benchmark average duration. But I don't think that should scare investors away. And I think this chart kind of helps support that case where we looked at a variety of different types of bond investments, starting with higher-risk investments on the left with high-yield bonds, and then moving to more higher-quality and more conservative investments as we move from left to right. And we wanted to show the right. We wanted to show the range of yields for the past three years and then where those yields are right now. And you can see with a lot of the high-quality investments, whether it's treasuries, the ag, municipal bonds, the average yields we're seeing are still at the high end of their three-year range.

And they're at the high end of their 15-plus-year range. So I think that's really important. So yes, there's a concern that yields move higher. But we don't think investors need to outright avoid all intermediate-term bonds. We still think there can be value there, especially if you have a time horizon that matches up with that. If you consider, say, a five-or seven-year Treasury note, and you can get a yield near 4. 5%, if you have a liability in five or seven years, we think that yield's pretty attractive. So while we are worried about the risk of rising yields to bond prices, we still think it's important to look at the big picture and look at what those income payments can be. And remember why you hold bond investments.

You hold them for income payments over time. So you can still consider them in moderation, but we think there'll probably be a better opportunity down the road to really consider some longer-term bonds. We just don't think we're there right now, given that risk of higher yields. So let's build on this chart and zero in on some of these specific asset classes. So, Cooper, let's go to you. I mentioned before that you're our municipal bond strategist. So let's focus on muni bonds. And let's talk about what the broad outlook is there. Yeah, I think that's a great transition call. And I do want to narrow in on the very right-hand side of this chart. And I want to reiterate one of the points that you had mentioned, is that we don't think that investors should avoid fixed income.

Even though our expectation is that the balance of risks is to higher yields, and that might be a negative to prices and total returns, that does not mean that you should avoid fixed income. We still think that there are compelling opportunities in the fixed income market. And especially, again, if we narrow in on the right-hand side of this chart, the municipal bond market is one of those areas that I think offers a relatively compelling case of high credit quality combined with attractive yields after you adjust them for taxes. And that's a key point of municipal bonds, because municipal bonds, they usually pay interest income that's exempt from federal income taxes as well as state income taxes. So as a result, on the surface, they're going to yield less than, say, a corporate bond or a treasury bond.

But after you adjust for taxes, if you are an investor in a higher tax bracket, then you can potentially get a higher after-tax yield by using municipal bonds relative to other alternatives. Just to illustrate, if you're an investor who's in the top tax bracket, say, in a high-tax state like California or New York, that 3. 6% yield that you see that's before taxes would get boosted up to something that's a 7. 3% yield for a fully taxable bond. So again, we think that if you're an investor in a high-tax bracket, that's probably an attractive yield given where we are on other alternatives, especially considering the credit quality. Now, in terms of what has happened so far this year in the muni market, so far returns have been relatively benign.

So they've been kind of trending sideways. That's unlike, say, the U.S. Aggregate bond market, which is kind of a big part of the U. S. market, the corporate bond market or the treasury market. You can see that that yellow line, which tracks total returns for the entire year, it hasn't moved as significantly as, say, the blue lines or the single red line. Now, one thing that's interesting is that even though post the election on the treasury market, yields have moved up quite a bit in the treasury market; that's not the same as the municipal bond market. So yields actually haven't really risen in the muni market as they have risen in the treasury market. So one thing that that's caused is it's caused relative valuations to become a little bit more stretched than where they were.

Now, when we look at valuations, it's really just a simple metric that says, well, what can you get on a AAA-rated municipal bond relative to what could you get on a U. S. Treasury bond? And it's a way that we gauge the near-term attractiveness of the muni market. So given that those have moved a little bit lower, it wouldn't be too surprising to start to see muni yields begin to catch up a little bit with treasury bonds. So again, there might be better entry points later on down the road, but we do not think that that's cause for concern or a reason to avoid the entire Muni market because every day that you're not invested in a fixed-income security, that's just interest income that you're foregoing. And over time, that really, really can build up.

The power of compounding is one of the biggest things in terms of investing. So that's something to be aware of, to not avoid fixed income, even though our expectation is, maybe there might be a little bit better opportunities down the road. But turning to credit quality in the muni market, Colin, one of the things is, if you've tuned into these shows in the past, probably sound like a broken record on this, but overall, credit quality continues to remain stable. We're probably past the peak in terms of credit quality because post-COVID, many states got substantial fiscal aid, tax revenue surged to record-level highs. We're starting to see that roll over. And in terms of the fiscal aid, that's money that's going to expire by the end of 2026.

And I think that that's probably a headwind to some issuers out there in the market. So the National League of Cities, they recently did a study, and they looked and polled all of the different cities that they cover. And they found that about a third of the cities that they cover are either somewhat or at least moderately concerned about the end of the fiscal aid that was provided. And about a quarter of those have no plan in place in terms of what to do once that fiscal aid expires. Now, the bright side is, many of these state and local governments, many of these cities have built up their rainy day funds to record-level highs that they can tap into if necessary. But again, with the expiration of those funds, it's probably going to be a headwind going forward.

The benefit, though, is that the backdrop in terms of credit quality is relatively favorable for many cities. They tend to get most of their revenues based off of property taxes. We've seen a significant increase in property values post-COVID, so that bodes well for property tax values. Also, the runway between when homes are assessed and when that property tax has come in tends to be a pretty long runway. So that gives cities a lot of planning room, a lot of leeway in terms of what to do going forward. But in terms of where to invest and what this all ultimately means, one thing that I'd be a little bit more cautious on right now is lower-rated municipal issuers.

One is, again, we don't necessarily think that credit quality is substantially deteriorating or falling off of a cliff, but we do think that it's a little bit more of a prudent approach to take a little bit of a cautious approach because there are some of these headwinds. The second piece is, you're really not getting compensated as well as you have been in the past for investing in BBB-rated issuers. So this chart here, what we're looking at is what is the difference in terms of yields for BBB-rated issuers relative to AAA-rated issuers. It's something known as a spread, and you should be compensated more for investing in lower-rated credits because there is a higher probability of downgrade, higher probability of default, or missed interest and principal payments, and that's what's occurring.

But as you can see, that spread has been trending lower. It is below its five-year average, and it's very near the low point over the past five years. So again, you're just not getting as compensated for investing in lower-rated credits as you have in the past. So what we would suggest is to stick with a portfolio of, generally speaking, probably AA-rated, maybe dip into the single A-rated category, just focus on those higher-rated issuers if you're a municipal bond investor at this point. Cooper, you were talking about when you look at MUNIs, comparing them to treasuries because of just the tax benefit they provide, a question that we got submitted from someone during registration was about the potential for the muni tax exemption to be eliminated. Do you have any thoughts there?

Yeah, that's a great question, and that's really been one that's been building steam, especially post-election, because now that it's been declared, a red wave, the Senate, the House, and the President are all Republican, it's likely that the tax cuts and jobs acts are going to get fully extended, potentially there are going to be more tax cuts, and ultimately tax cuts comes down to a math problem. If you're going to cut revenues, you're going to have to cut expenses to try to make this money, make it all balance correctly. One of the areas that some investors or some people have started to talk about is, well, maybe we eliminate the municipal bond tax exemption. I think that that's a very low probability of that actually coming to fruition.

The reason being is that it would just do more harm than it would do good. If you look at the cost of the municipal bond tax exemption, so the overall cost over the next 10 years is projected to be about $300 billion. That's a big number, but if you look at the overall cost of extending out the Tax Cuts and Jobs Act for the next 10 years, that's about $5 trillion. Cutting the municipal bond tax exemption is really just a drop in the bucket of helping to pay for it. Additionally, muni bonds are used by governors on both sides of the aisle. It does receive support from Democratic governors, Republican governors. It's a bipartisan issue, not a Republican versus Democrat issue.

Again, given the strong support behind using municipal bonds, I don't think that it would come to fruition that they would cut the entire municipal bond tax exemption. It would also curtail investments in infrastructure, and I don't think that that's something that really many people want to see happen. What I could see occur is there might be some types of issuers that have the ability to issue tax exempt debt be eliminated. That was something that was originally proposed in the 2017 Tax Cuts and Jobs Act. It never came to fruition, but private activity bond issuers, those are a type of kind of unique issuer. There's things like airports, for example. Maybe they would have their ability to issue tax exempt debt be curtailed.

But in terms of states, cities, local governments, water utility districts, those that you think of as kind of your traditional municipal bond issuers, I really don't see that happening. Never say it can't happen, but I think the probability is probably low. That's great. That's great, Cooper. And we got another question submitted from a participant about the outlook for states. So what's your outlook for states? Are there any that maybe we should avoid? But also, let's do a request for having a lightning round here because we're running low on time and we still have a lot of content. So let me get your real quick hit. Yeah, so overall, the outlook for states really is similar as the outlook for local governments is that it looks to be relatively stable, but we probably are facing headwinds.

Now, are there states that investors should avoid? We don't necessarily think so. And in fact, when it comes to investing in a portfolio of municipal bonds, for only investors in states other than California or New York, we'd suggest investing in a nationally diversified portfolio of bonds. Oftentimes, what we found, Colin, is that investors choose to stick in their home state because if they buy a bond from their home state, it's exempt from state income taxes. In most cases, though, we think that the diversification benefits of adding other issuers from other states outweighs that. The reason that the only states that we suggest sticking with an all-state portfolio are New York and California is that both of those states are very large issuers of municipal bonds. So you can find many different issuers with differing credit risks.

In a lot of other states, that's very difficult to do so. So that's really what we'd suggest in terms of should you stay in state, kind of the outlook overall on states, or should you avoid certain states. But I know we've covered quite a bit on the muni market. I want to jump to the corporate bond market. I want to give you a chance to kind of highlight some of your main points there. So I talked about the attractiveness overall of municipal bonds. Does that apply to corporates as well? Kind of what's your thinking right now? It does apply. And Cooper, just a heads up, I'm going to do a lightning round here. So I'm kind of going to go through a lot of the topics that we've discussed and I'll kind of cue you when we can move along with slides.

But we do find corporate bonds attractive. Corporate fundamentals are really strong right now, which shouldn't be too surprising because the economy's been really resilient. Corporate profits in aggregate are at an all-time high. Corporate balance sheets are pretty strong. I really like this chart here. I think it kind of sums up a reason for the strength. Even though we've had this big run-up in interest rates over the past few years, on average, corporate coupon rates are still pretty much in line with where they were in the years leading up to the financial crisis. And to the pandemic, not the financial crisis. And that's because a lot of companies used the drop in interest rates in late 2020 and throughout 2021 to just refinance a lot of the debt they have outstanding and lock in historically low interest rates.

So even though we've seen in aggregate bond yields rise, companies are still seeing a low average cost. And the way I relate this to the mortgage market, where a lot of people-if you're a homeowner and you locked in a mortgage in 2020 or 2021 at a very low rate, mortgage rates have since risen sharply, but that might not impact you directly because you've locked in a low rate. And I think that translates to the corporate bond market. What we like about corporate bonds are the yields they offer. So, if we move to the next slide, the slope of the investment-grade corporate bond yield curve, I think, is attractive, where you earn higher yields by investing in investment-grade corporate bonds. Cooper addressed this before. It's called a spread.

It's the extra yield you earn to take the risk of investing in a non-governmental entity. What I like about the slope of the curve is that it is more upwardly sloping, where if you look at the yellow line, the treasury curve, it's relatively flat. You're not really being compensated to consider intermediate or longer-term treasuries. You are earning higher yields when you consider intermediate or long-term corporate bonds. If you're looking to extend your duration in moderation, think about 5, 7, 10-year bonds to lock in what we think are attractive rates, you can do that with investment-grade corporate bonds. I think that's still attractive. In terms of taking too much risk, we're a little bit cautious there. If we move to the next slide, I break down the historical look at credit spreads based on credit rating.

Again, a credit spread is the extra yield you earn by lending to a corporation. On this chart, I look at investment-grade and high-yield on the left side. As you go from left to right, I look at the specific credit rating sub-indices. I looked at what the percent rank of the most recent spread is for each of those indices over the past 10 years. At first glance, it almost looks like there's a mistake with this, is there a typo? But those 0 . 0 numbers are legit. We're at the lowest spread levels of the past 10 years for all of these sub-indices except for that CCC rating on the right. If we go back 15 years, we're at the lowest level.

We think it makes sense to take risk if you're being compensated for it, but that's just really not the case today. When you look at an investment like a high yield bond, which has a greater risk of default, the absolute yield might look attractive. You can get average yields near 7% or more, but a lot of that just comes from the level of treasury yields and not risk compensation. We're a little bit cautious there. You can hold them in moderation, but you can also hold them in terms of credit markets and areas of opportunity. Preferred securities are an area I focus on. They're hybrid investments that have characteristics of both stocks and bonds. Normally, they offer slightly higher yields because of those hybrid characteristics. They tend to rank below your traditional bond.

In a worst-case scenario, if a company were to go bankrupt, there's a priority of payments. Preferred securities generally rank lower than a traditional senior unsecured bond. Usually, you earn higher yields because of that. If you look at this chart, I compared the average yield of a preferred security index to the average yield of a BBB-rated corporate bond index. I use BBB because most prefers have ratings around BBB. Right now, you actually earn lower yields with those preferred securities even though they rank lower and have a lot of interest rate risk. If you're looking for higher yields, you might just be better off in traditional investment-grade corporate bonds rather than preferred securities because you're not being compensated too well for it. One final note, we get a lot of questions submitted for these webcasts about education and frequently asked questions.

We try to address those on Schwab. com. We have this slide up here to show you where you can find a lot of the frequently asked questions. I think it's a great place to start your bond investing journey. I know bond investing can be difficult, confusing, and complex. I think a lot of investors don't really know where to start. I think this is a great place to start to answer some of those questions and have a better understanding to actually consider an investment option. Finally, we do have a survey that we like to share with all of you. I encourage all of you to take it, share your thoughts, and maybe share ways that you think maybe we can improve this. We always want to take your input here to make sure that we're answering the right questions.

There's no shortage of things that Cooper and I would love to talk about, but we want to make sure we're talking about the things that resonate with all of you. More importantly, provide your thoughts in there so that we can better tailor this going forward so that we're answering all of your questions. With that said, that's all we have for today. Thank you all for joining. As I mentioned at the top, this is a monthly webcast we do. It's the second Thursday of every month. The next webcast, coming up in December, will feature our 2025 outlook. It will include myself, Cooper Howard, and Kathy Jones, our Chief Fixed Income Strategist. We'll talk about our outlooks for 2025 from a very high-level standpoint, and then Cooper and I will provide our outlooks on the corporate and municipal bond markets, respectively. Thank you all for tuning in, and see you next month.