On Investing

Markets may be entering a fundamentally different era. In this episode, Liz Ann Sonders and Collin Martin explore why long-term bond yields remain elevated, how rising uncertainty is driving a higher term premium, and what a potential shift away from the “Great Moderation” could mean for investors.

They discuss how inflation volatility, reduced likelihood of Fed asset purchases, and geopolitical tensions are reshaping expectations for interest rates and economic stability. The conversation also examines changing correlations between stocks and bonds, and whether equities are underpricing risks.

Then, Liz Ann is joined by RSM Chief Economist Joe Brusuelas. Joe reinforces the idea of a structural shift, describing a “split-screen” economy marked by inequality, policy shocks, and an AI-driven transformation. He expects trend-level growth but sustained inflation pressures, with risks tied to energy supply disruptions and potential knock-on effects to equities via the wealth effect. The conversation highlights a disconnect between resilient equity markets and more cautious signals from bond markets, suggesting investors brace for higher-for-longer rates, ongoing volatility, and a more complex economic cycle.

Finally, Collin and Liz Ann look ahead to next week’s upcoming macroeconomic indicators and key data releases. 

To keep up with Joe Brusuelas, you can follow him on X: @joebrusuelas

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal. 

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Alternative investments are speculative and involve a high degree of risk. Investors may lose all or a substantial portion of their investment. Alternative investments cover a wide array of strategies, including real estate, private equity, private credit, and hedge funds. Risks will vary based on each unique strategy and can include investments in highly illiquid assets or securities, use of leverage, higher fees, lower transparency, tax risks, and limited ability to redeem or limited transferability.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions 

The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.

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In this episode, Liz Ann Sonders and Collin Martin explore how rising Treasury yields and persistent inflation pressures are reshaping the relationship between stocks and bonds, reviving a more volatile, “temperamental” market regime where higher yields can weigh on equities. They discuss the likelihood of a “higher for longer” rate environment, the challenges facing incoming Fed leadership, and why rate cuts appear increasingly unlikely in the near term.

The conversation then shifts to municipal bonds with Cooper Howard, who explains how munis work, why their tax advantages make them especially attractive for higher-income investors, and how to evaluate them relative to Treasuries and corporate bonds. He highlights that while munis are generally high quality and relatively stable, investors should still pay attention to credit risk, valuation metrics like the muni-to-Treasury ratio, and strategy considerations such as bond ladders.

Finally, Collin and Liz Ann look ahead to next week’s upcoming macroeconomic indicators and key data releases. 

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

 

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Tax-exempt bonds are not necessarily a suitable investment for all persons. Information related to a security's tax-exempt status (federal and in-state) is obtained from third parties, and Charles Schwab Investment Management, Inc., dba Schwab Asset Management does not guarantee its accuracy. Tax-exempt income may be subject to the Alternative Minimum Tax (AMT). Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax.

A bond ladder, depending on the types and amount of securities within the ladder, may not ensure adequate diversification of your investment portfolio. This potential lack of diversification may result in heightened volatility of the value of your portfolio. As compared to other fixed income products and strategies, engaging in a bond ladder strategy may potentially result in future reinvestment at lower interest rates and may necessitate higher minimum investments to maintain cost-effectiveness. Evaluate whether a bond ladder and the securities held within it are consistent with your investment objective, risk tolerance and financial circumstances.

Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the fund.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions

Correlation refers to investments that tend to move in opposite directions: when one rises, the other falls.

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Liz Ann Sonders and Collin Martin discuss hotter-than-expected inflation data, with volatile energy prices playing a central role. Because the Fed can’t directly influence oil prices, inflation staying above target likely keeps policy on hold, with rate cuts off the table for now and even the possibility of hikes if core inflation or labor strength accelerates.

They also explore how consumers feel inflation differently than economists measure it, contributing to weak sentiment despite still-positive economic growth. Real incomes are slipping, but spending remains supported, helped in part by strong AI-driven business investment.

Then, Liz Ann and Collin cover the growing dominance of AI: it’s propping up GDP, earnings expectations, and capital spending, but also introducing concentration risks and shifting corporate financing toward debt. In the bond market, strong demand has kept credit spreads tight, though potential risks include oversupply and uncertain long-term returns on AI investments.

Collin Martin also highlights rising Treasury yields, especially the 10-year, and the role of the “term premium” in a more uncertain, higher-inflation world. This shift is contributing to a negative correlation between stocks and bonds, which is a dynamic more reminiscent of earlier, more volatile inflation regimes.

Finally, Collin and Liz Ann look ahead to next week’s upcoming macroeconomic indicators and key data releases. 

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures 

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Currencies are speculative, very volatile and not suitable for all investors.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions

Negative correlation refers to investments that tend to move in opposite directions: when one rises, the other falls.

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Liz Ann Sonders and Collin Martin examine the market backdrop shaped by the Middle East conflict, noting that while oil price volatility has influenced inflation expectations and Treasury yields, its broader economic impact has been limited so far due to lag effects and structural shifts in the U.S. economy. Meanwhile, investor attention has returned to earnings season and AI-driven growth, with a narrow group of mega-cap companies responsible for a disproportionate share of earnings upgrades—highlighting ongoing concentration risks in both markets and fundamentals.

Then, Collin Martin is joined by Inga Rachwald, director and senior investment portfolio strategist supporting Schwab Asset Management. Inga addresses common challenges, including the perceived breakdown of diversification during periods of market concentration or rising rates, and explains why these are often misinterpretations driven by inappropriate benchmarks. The discussion introduces goal-based investing as a more practical framework, aligning portfolios with specific time horizons and objectives rather than short-term performance comparisons.

Finally, Collin and Liz Ann look ahead to next week’s upcoming macroeconomic indicators and key data releases. 

To learn more about behavioral biases that can cloud your judgment, check out the latest episode of the Choiceology podcast, hosted by Katy Milkman.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal.

Diversification, asset allocation and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.

Rebalancing may cause investors to incur transaction costs and, when a non-retirement account is rebalanced, taxable events may be created that may affect your tax liability.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Currency trading is speculative, very volatile and not suitable for all investors.

Investing in cryptocurrencies involves risk, including the risk of total loss of principal invested.

Cryptocurrencies such as bitcoin and ethereum are highly volatile, are not backed or guaranteed by the bank, any central bank or government; are not deposits; are not FDIC insured; are not SIPC protected; and lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have.

Investing in alternative investments is speculative, not suitable for all clients, and generally intended for experienced and sophisticated investors who are willing and able to bear the high economic risks of the investment. Investors should obtain and carefully read the related prospectus or offering memorandum, which will contain the information needed to help evaluate the potential investment and provide important disclosures regarding risks, fees and expenses.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions

Inverse correlation refers to investments that tend to move in opposite directions: when one rises, the other falls.

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The Federal Reserve faces a pivotal moment: the transition from Jerome Powell as Fed chair to Kevin Warsh, with Powell opting to remain at the Fed as a governor. Collin Martin and Liz Ann Sonders discuss what Warsh’s confirmation signals for future Fed policy, noting his interest in reshaping how the Fed communicates with markets—potentially scaling back press conferences, reducing the emphasis on dot plots and projections, and encouraging less frequent public commentary from Fed officials. 

Then, Collin Martin is joined by Winnie Cisar, global head of strategy at CreditSights. She provides an in‑depth look at the current state of corporate credit markets. Winnie explains how her team blends macroeconomic signals, such as inflation trends, labor market data, and central bank policy, with bottom‑up company analysis to form credit views. Cisar highlights how the structure of credit markets has evolved since the financial crisis, with risk increasingly spread across high-yield bonds, leveraged loans, and private credit. These shifts, along with increased debt issuance from banks, technology firms, and utilities, have contributed to an overall improvement in index‑level credit quality, even as risks have migrated to less transparent parts of the market.

Finally, Collin and Liz Ann look ahead to next week’s upcoming economic indicators and data releases. 

On May 1, in honor of National Investing Day, the Schwab coaching team will be hosting a special day of educational events. You can learn more about those at schwab.com/coaching.

On Investing is an original podcast from Charles Schwab. For more on the show, visit schwab.com/OnInvesting. 

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Important Disclosures

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab.

Past performance is no guarantee of future results.

Investing involves risk, including loss of principal.

Diversification and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

The policy analysis provided by Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Indexes are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. For more information on indexes, please see schwab.com/indexdefinitions

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