Morningstar Spain's Fernando Luque explains the reaction in Madrid to news of a bank bailout , further problems facing European governments, and a potential outcome for the eurozone.
Germany is hitting negative sovereign yields, while Spanish regions and banks seek financial assistance from their parent country, which needs a bailout of its own.
Bonds are a better option than cash and less volatile than stocks, but investors should be mindful of headwinds and possibly rethink their fixed-income allocations, says Morningstar's Christine Benz.
Core bond funds have cut their interest-rate sensitivity relative to their benchmark, and Morningstar's Eric Jacobson says the dramatic changes in correlations have skewed common metrics, such as beta.