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Bonds Are Dead?

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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.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.