Some of the biggest bond funds have reflected this year's improvement. Treasury component of the FTSE US Broad Investment-Grade Bond Index has risen about 1.8% so far this year, after falling about 12.6% last year, the biggest annual decline since inception in 1980. dollar-denominated securities with maturities greater than one year. ![]() bonds, including interest payments and price changes, totaled 2.4% so far this year, compared with negative 13% last year, according to the Morningstar US Core Bond TR USD index, which tracks fixed-rate, investment-grade U.S. "As we see economic activity slow, high-quality duration has grown in appeal as investors see policymakers already having one eye on when to ease monetary conditions," said Husain, referring to bonds' sensitivity to interest rate changes. "The current level of yields on offer have not been seen since before the Global Financial Crisis," said Arif Husain, chief investment officer and head of international fixed income at T. This leaves investors to focus on how to play a widely anticipated economic slowdown - generally a good scenario for bonds because when central banks ease rates to stimulate demand existing fixed-rate securities are worth more. Rate hikes erode the value of existing bonds because new paper offers higher yields, but now, even if more hikes are coming, the bulk of monetary tightening is most likely over. central bank rapidly hiked rates to curb the hottest inflation in more than four decades. It is a turnaround from the losses of 2022, which marked the end of a 40-year bull market in bonds, as the U.S. government bond investors have racked up positive returns so far this year, with the higher income from bonds offering a buffer against market weakness if the Federal Reserve increases interest rates again.
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