This has been a good year for bonds. They’re not dead. And it’s the high quality bonds that are leading the way. This from the WSJ:

Bonds perceived as safe have produced better returns than riskier ones for the first time since 2010 and the second time since 2006, according to data from Barclays PLC. U.S. government bonds have rallied, high-grade corporate bonds have posted larger gains than junk bonds, and higher-rated junk bonds have risen more than more-speculative ones.

The safe-bond gains underscore the far-reaching effects of a rally in U.S. Treasury prices that few analysts or investors predicted, reflecting softer-than-expected U.S. growth, quiescent inflation and Federal Reserve promises to keep rates low for an extended period.

The tepid pace of growth this year has caught many investors, strategists and economists on the wrong foot. Heading into the year, many had expected the U.S. economy to accelerate, driving continued gains for riskier assets such as stocks and junk bonds. But the U.S. economy expanded at an anemic 0.1% clip in the first quarter, and data since April have continued to show uneven growth. Meanwhile, euro-zone growth remains weak, and momentum in China is waning.