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After a Terrible Year for Bonds, the Outlook Is Better


“Basically, it’s never been worse than the last year,” he said in an interview.The FundamentalsBonds are loans made by investors who, in return, receive regular income, known as yield. Market yields have already risen appreciably.Bond returns — in an actively traded portfolio of individual bonds or in a mutual fund or an exchange-traded fund — come from a combination of yield and price changes. When yields rise, bond prices fall, and vice versa. That’s fundamental bond math.These price effects are much greater for bonds of longer maturity — more precisely, bonds of longer duration, an important measure of interest rate sensitivity. This means that the price of a 30-year Treasury bond will move much more than the price of a three-month Treasury bill …

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