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.
Fuelling 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 policy-makers unexpectedly pencilled in 75 basis points of easing in their December economic projections amid signs that inflation continued to cool.
Falling rates are expected to guide Treasury yields lower and push up bond prices – an outcome that a broad swathe of investors are anticipating. The latest fund manager survey from BofA Global Research…
