Navigating Uncertainty

by Liz Ann Sonders, Kevin Gordon, Collin Martin, Michelle Gibley, Chris Ferrarone of Charles Schwab, 4/20/26

This month, our experts discuss the difference between betting and investing; the impact of the Iran war on Treasury yields, interest rates, and inflation; and the potential opportunity in infrastructure investments.

Here are the month's highlights from our experts:

U.S. stocks and economy: Betting isn't investing

  • A long-term investment strategy means holding claims on productive assets and future cash flows, while gambling products are designed with a negative expected return for participants in the aggregate.
  • Casino-like interfaces and prediction-market marketing obscure risk. The data show most participants lose over time, often more than they realize. The true cost is not just the losing bet, it is the compounded future value of the investment that was never made.
  • When exploring the key differences between investing vs. gambling, know that in personal finance owning beats hoping and discipline beats speculation, with the long run belonging to those who invest in it.

Fixed income: Iran, inflation, and interest rates

  • We expect Federal Reserve policy to stay on hold for several meetings and the 10-year Treasury yield likely to remain in the 4% to 4.5% range over the short run. If oil prices stay elevated for longer and/or inflation expectations rise, yields may rise above that 4.5% upper threshold. Conversely, economic growth prospects would likely need to slow considerably for the 10-year Treasury yield to fall back below 4%.
  • Given the elevated inflation risk, we prefer intermediate-term maturities, those in the four- to 10-year range, rather than favoring long-term maturities. Uncertainty around the conflict in the Middle East could pull yields of these investments higher, potentially resulting in lower prices over the short run, however.
  • We suggest investors consider focusing on higher-quality bonds, while more aggressive investors can consider preferred securities for added income, recognizing their higher potential volatility and interest rate risk.