Following two years of risk-on market fervor, 2018 delivered a reality check to bond investors.
Even with new leadership, the Federal Reserve continued to raise short-term interest rates and simultaneously pared back its quantitative-easing-inflated balance sheet; both were efforts to normalize monetary policy while U.S. economic data appeared strong. A strengthening dollar, escalating U.S. trade-policy fears, and myriad geopolitical tensions further rattled markets at points throughout the year, which ended with a meager single-basis-point return for the Bloomberg Barclays U.S. Aggregate Bond Index.
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Emory Zink does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.