Typically, when investors leave equities, they head for fixed-income… typically.

Equity markets were rattled after the Trump administration announced sweeping tariffs earlier this month, and that volatility spread into the bond market. Yields on Treasuries are now higher than they were in late 2022, when both stocks and bonds last slumped together — raising concerns about a possible recession.

That leaves investors facing a triple whammy: falling stocks, falling bonds, and a weakening dollar. On the upside, though, the headwinds are an opportunity for advisors to reassess how much volatility their clients are comfortable with. “It’s a good gut check,” said Sean Dann, director of investment research at Marshall Financial Group. “Everyone thinks they’re risk-tolerant investors, but that’s only when the market’s green.”

Not So Quality Bonding Time

The bond market is under pressure from high federal interest rates, now at 4.3%, and mounting concern that high tariffs will drive up inflation while simultaneously stalling growth. A weakening dollar is compounding the challenge. “It’s becoming more expensive for euro or yen investors to hedge US currency exposure, driving even more bond outflows,” said Tom Graff, CIO at digital planning firm Facet.

Even Trump’s announcement of a 90-day pause for many tariffs on April 9 wasn’t enough to calm investors, and Treasury yields actually increased over the following two days. They’re now at the higher end of recent bounds:

• Yields for 10-year Treasurys are at 4.37%. In the past year, the yields have ranged from 3.6% to 4.8%
• Yields for both 20-year and 30-year government bonds are hovering around 4.8%. Yields for both have ranged between 4% and 5% in the past year.

Panic Like it’s 2022. Bonds and equities dropping in tandem is rare — but it happened in 2022 as a still-COVID-rocked US faced spiking inflation upon reopening the economy. “It was a very ugly bear market for equities, and one of the worst years in US history for bonds,” said Dann. The key difference, though? In 2022, there was consensus that rate hikes were necessary.

“The Fed is squeezed between a rock and a hard place where they need to decide if they want to raise rates to fight the expectation of higher inflation or do they want to lower rates to fuel business activity,” Dann said. Meanwhile, political turmoil isn’t helping. Trump recently blasted Fed Chair Jay Powell on Truth Social, calling him a “major loser” and saying his “termination” can’t come soon enough though he later told reporters he’s not considering firing the central banker. “It’s a very unique and tough environment if you want to have a lot of trust in the US right now,” Dann said.

Vanguard upended investing once. Who’s up for another round?

The Malvern, Penn.-based asset manager announced a partnership with Blackstone and Wellington last week to launch new products that package private and public assets into a single investment, which is becoming a hot-button corner of the industry. Their plan puts Vanguard on a collision course with other heavyweight partnerships like State Street and Apollo, as well as Capital Group and KKR. The big question becomes: How does a push into private investments — which generally chase bigger returns with additional risk and higher fees — fit in with Vanguard’s ethos of taking a low-cost approach?

“Private assets have been sort of thrust on the industry, by the industry,” said Morningstar research analyst Daniel Sotiroff. “It just doesn’t seem to fit with what Vanguard’s been doing for the last 50 years.”

Vanguardians of the Galaxy

Private investments have been a staple in ultra-high net worth investors’ portfolios for years and advocates say the new products are opening up those opportunities to the masses. In 2024, private assets topped $13 trillion globally and are expected to hit $15 trillion this year. Vanguard, which manages some $9 trillion for more than 50 million clients, already opened a private equity fund in 2020. What’s stopping it from bringing a more index-driven approach to the rest of the private space?

“Maybe this is an opportunity to disrupt that whole system,” Sotiroff said, adding the company could aggressively cut fees and pass the savings on to its investors. “It forces everyone else to compete on their terms.” One area Vanguard may focus on is retirement plans that, like private investments, have long-time horizons and lock up assets long-term. New products could include:

• Collective Investment Trusts, which are similar to mutual funds, but specifically designed for qualified retirement plans.
• Interval funds that redeem their shares at specific, pre-defined intervals; or tender offer funds that periodically repurchase their shares at net asset value.

“Investors with the right combination of risk tolerance, long-term time horizon, liquidity needs, and access to high-performing managers can benefit,” said Rich Powers, Vanguard’s head of private equity product.

I Am Groot? But some advisors have voiced concern that firms may be looking to offload “junk” assets or that the manager’s interests might not be aligned with their own. “That’s where you start to see the problems,” Sotiroff said, adding that Vanguard executives said the products would be built in the “Vanguard way.”

“Vanguard has an answer to just about everything,” Sotiroff said. “If private assets are the next big thing, you have to at least have your hat in the ring.”

Death and taxes — maybe it’s the certainty of those that make them less worrisome than something people have more control over: Running out of money in retirement.

Almost two-thirds of people cited exhausting their financial resources as a bigger worry than dying, according to a report Tuesday from Allianz Life. The rates were higher among Gen Xers (70%) and millennials (66%) than baby boomers (61%), according to results of the survey of 1,000 people conducted earlier this year. Inflation, high taxes, and low expectations for Social Security income were the top reasons behind the sentiment. Less than a quarter, 23%, said they have raised their concerns with a financial professional, down from 28% in 2024, according to Allianz.

“With Americans living longer in retirement and facing risks like market volatility, creating a financial strategy so that your money lasts your lifetime is a daunting task,” Kelly LaVigne, the company’s vice president of consumer insights, said in an announcement.

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