Sunday, January 6, 2013

Why Bond Funds Could Get Dicey This Year

The new year is just a few days old, but according to the WSJ, for mutual-fund investors, the bond market already is proving tricky to navigate.  On the surface, 2013 looks like it ought to be a safe environment for bond mutual funds. The Federal Reserve is expected to keep interest rates at rock bottom so the odds of a bear market should be slim.

But U.S. Treasury prices started the year by tumbling—to the surprise of many—after last week's down-to-the-wire deal in Washington to avert the so-called fiscal cliff.

Having avoided the worst of the automatic tax increases, the country is now expected to avoid an economic slowdown and instead post moderate growth. That, in turn, spooked some investors….

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