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Fund Spy

The Third Quarter in Bond Funds

Economic and political uncertainty headlined the fixed-income markets.

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After a three-year stretch of interest-rate hikes that ended in late 2018, the Federal Open Markets Committee approved a rate cut in July 2019 for the first time since the financial crisis, affecting global markets on multiple fronts.

Fed Chairman Jerome Powell described that 25-basis-point cut as a "midcycle adjustment" and "not the beginning of a long series of rate cuts." At the time, that spooked markets as it made additional future cuts appear less likely. Powell led a subsequent quarter-point cut in September, though, effectively bringing the federal-funds target rate to between 1.75% and 2%.

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Zachary Patzik does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.