Bond market outlook

by: J.D. Steinhilber

To the surprise of many (ourselves included), long-maturity bonds were once again the place to be in the fixed-income markets in the first half of 2005, writes J.D. Steinhilber, founder of ETF newsletter and investment management firm Agile Investing. Despite record highs in commodity indexes, above-trend GDP growth and a Federal Reserve raising interest rates at every meeting, the 10-year Treasury yield declined from 4.22% on December 31 to 3.94% on June 30.

Recent strength in the stock market and the economic data has caused the 10-year yield to grudgingly move to about 4.18%.

The refusal of bond yields to move higher has caused a growing number of analysts to embrace a “new era