Fixed Income in 2018 - Still Under Pressure
As we entered 2017, we expected that steady growth and up to three Federal Reserve (Fed) rate hikes would drive low- to mid-single-digit returns in the broad high-quality bond market. In the end, with three Fed rate hikes in 2017 and a total return of 3.7% for the Bloomberg Barclays U.S. Aggregate Bond Index, these forecasts aligned with reality. Our expectation that the 10-year Treasury yield would end 2017 in the 2.25% – 2.75% range was also met, with the 10-year yield ending the year at 2.41%.
Our favored high-quality sectors were relative winners for the year as well. Corporate bonds, as measured by the Bloomberg Barcla... Read more