Title: Bond market outlook 2021 | Preparing as an investor | Fidelity
Headings: Bond market outlook 2021: A winter's tale
Bond market outlook 2021: A winter's tale
Key takeaways
How low interest rates are cooling the bond outlook
Bonds for ballast
Bonds for income
Finding ideas
Taxable bond funds
Fidelity funds
Non-Fidelity funds
Next steps to consider
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Content: Super-low rates also matter because they limit the amount that prices can rise and deprive bonds of their ability to increase the value of an investor’s portfolio. For bond prices to rise, yields need to fall as they have been since 1981. Now, with yields approaching zero, they aren’t likely to fall much further. Central banks in Japan and Europe have lowered interest rates below zero, but the Fed’s leaders have said they don't believe negative interest rates are right for the US. Instead, they have pledged to keep rates low for the next several years, even if short term inflation increases and GDP spikes. This represents a historic change in policy because the Fed has used rate increases to keep inflation under control since the 1980s. Coash points out that the yield on the 10-year Treasury note has historically tended to track the inflation-adjusted annual growth rate of US economic growth. He believes growth is likely to be tepid for the foreseeable future, making it hard for yields to rise back to historically average levels. " GDP growth is the sum of 2 things: growth in the labor force and growth in productivity," he explains. "