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Investment-grade corporate bonds—is now the right time for clients?

September 10, 2025

Investment-grade corporate bond yields are near the upper end of their 15-year averages, and starting yields tend to be good indicators of future returns.

Bloomberg US Intermediate Corporate Bond Index

Key takeaways:

  • If your clients need more fixed income, consider talking with them about investment-grade corporate bonds. Average yields on these securities with intermediate-term maturities currently range from 4.25% to 5.50%.1
  • Moreover, as this scatter plot illustrates, a close relationship has historically existed between starting yields on investment-grade corporate bonds and their subsequent five-year average annual total returns.
  • Given that investment-grade corporate bond yields are currently near the higher end of their 15-year range, now may be the right time to talk with clients about this opportunity.
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1 Bloomberg USD Corporate IG BVAL Yield Curve, as of 08/29/2025. Schwab Center for Financial Research, “Bond Market Update—September 2025,” accessed 09/09/25: https://www.schwabassetmanagement.com/content/bond-market-update.

Sources: Schwab Center for Financial Research, Bloomberg. Monthly data from 01/31/1990 through 07/31/2025. Bloomberg US Intermediate Corporate Bond Index. For additional information, please see https://www.schwab.com/resource/index-and-investment-term-definitions.

The R-squared, also known as the coefficient value, is directly related to how well the regression line captures the relationship between the variables in the scatter plot.

Yield to worst is a measure of the lowest possible yield that can be received on a bond that fully operates within the terms of its contract without defaulting. It is a type of yield that is referenced when a bond has provisions that would allow the issuer to close it out before its scheduled maturity.

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