The bond markets proved their resiliency in 2009, recovering dramatically from both a severe credit crisis and a deep economic recession. In a recent panel discussion, three of T. Rowe Price’s senior bond managers outlined what changed in 2009 and where the market may be heading in 2010. The panel included Steve Huber, manager of the T. Rowe Price Strategic Income Fund; Mark Vaselkiv, manager of the T. Rowe Price High Yield Fund and a 21-year veteran with the firm; and Mike Conelius, also a 21-year veteran with T. Rowe Price and manager of the T. Rowe Price Emerging Markets Bond Fund . How the Bond Market Turned the Corner Bond markets rallied in 2009 after investors nearly abandoned higher-yielding groups–corporate bonds , high-yield bonds , and emerging market bonds –during the crisis of 2008. As many altered course, the global bond market experienced one of its best annual performances. Treasuries struggled, however, hampered by low yields and fears about inflation. Several key events helped produce this fast-paced recovery: • Fed efforts to improve market liquidity proved largely successful. Many companies issued new bonds , providing an attractive stream of new opportunities for investors. • As the economy stabilized, investors became more willing to take risks and look for possible bargains. • [...]