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: Recommended for its ability to navigate rising rates by holding asset-backed bonds, such as private mortgages.
Analysts at Kiplinger and Morningstar highlighted several top performers for the year:
: Despite rising rates, long-term U.S. Treasury bonds returned 8.5%, significantly outpacing short-term bonds, which returned only 0.7%.
: The Fed raised short-term rates in March and June, with a third hike in December, bringing the target range to 1.25%–1.50%.
: TreasuryDirect announced that Series I bonds issued between November 2017 and April 2018 earned a composite rate of 2.58%.
The bond market in 2017 was characterized by rising short-term interest rates as the Federal Reserve implemented multiple hikes, yet long-term bonds unexpectedly outperformed short-term counterparts. Investment-grade and high-yield corporate bonds both saw strong returns of 6.4% and 7.5%, respectively, supported by tightening credit spreads.