Fixed income investors endured steep drawdowns in calendar year 2022 after decades-highinflation prints drove a significant policy-tightening campaign by the Fed, fueling a rise in interestrates across the Treasury curve. The traditional tool of investor diversification, a 60-40 portfolioof equities and fixed income, generally failed to limit downside as negative performance in fixedincome was mirrored by drawdowns in equity markets. Going forward, the combination of tightmonetary policy, inflation above the Fed’s 2% target and elevated recession concerns has causedinvestors to seek refuge in money market funds and Treasury bills, with both yielding nearly5.5%. As of Sept. 30, assets in money market funds had grown approximately $910 billion yearto-date, a 20% gain, to an all-time high of $5.6 trillion.
