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A Period of Relative Calm for Bond Funds

Modest gains for most investors, but the riskiest funds continued to flourish in the third quarter.

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The third quarter of 2017 was a relatively uneventful one. Although short-term yields ticked up slightly, U.S. Treasury yields across the maturity spectrum finished the quarter remarkably close to their levels as of June 30.

The yield on the 10-year Treasury fell for the first two months of the quarter and bottomed in September amid escalating tensions. However, it then rose sharply and finished the quarter at 2.33%, a modest 2 basis points higher than its level at the end of June. A relatively hawkish tone from the Fed, coupled with the release of the Republican tax plan, was credited for helping to buoy expectations for economic growth and higher rates. 

Sarah Bush does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.