By Davide Barbuscia
NEW YORK (Reuters) -As bonds emerge from a historic selloff, some investors expect better times in the U.S. fixed income market next year – as long as the Federal Reserve’s rate cuts play out as anticipated.
A fourth-quarter rally saved bonds from an unprecedented third straight annual loss in 2023, following the worst-ever decline a year earlier. The late year surge came after Treasuries hit their lowest level since 2007 in October.
The year-to-date total return for the Morningstar US Core Bond TR USD index, which tracks U.S. dollar-denominated securities with maturities greater than one year, was 5.47% as of this week, up from about minus 13% last year.
Fueling those gains were expectations that the Fed is likely finished with rate increases and will cut borrowing costs next year – a view that gained traction when policymakers unexpectedly penciled in 75 basis points of easing in their December economic…
