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Thomas Kenny

November 2012 and Year-to-Date Bond Market Returns

By December 6, 2012

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November brought a continuation of some familiar trends for the bond market, with mildly positive returns for the market as a whole and strong outperformance for the higher-risk segments, including corporate, high yield, and emerging market bonds. Even though investors have plenty of negative headlines to worry about, President Obama's re-election ensures that the U.S. Federal Reserve will be able to maintain its current policy of monetary stimulus and ultra-low interest rates - a positive for the higher-yielding segments of the market. Municipal bonds also made headway despite concerns that the asset class would lose some of its current tax exemption as part of the negotiations related to the fiscal cliff. Higher taxes for wealthier tax payers became a virtual certainty following the elections, boosting demand for tax-exempt assets. U.S. Treasuries also generated positive returns, turning in their best month since July as investors sought potential safe havens from potential market volatility associated with the fiscal cliff negotiations.

To find out what may lie ahead for the bond market, see my 2013 Bond Market Outlook.

Below are the bond market returns for November 2012 and year-to-date through November 30.

November:

  • Investment-grade U.S. bonds: 0.16%
  • 10-Year U.S. Treasuries: 1.17%
  • TIPS: 0.48%
  • GNMAs: -0.07%
  • Municipal bonds: 0.28%
  • Corporate bonds: 1.29%
  • High yield bonds: 1.65%
  • International government bonds: -0.02%
  • Emerging market bonds: 0.90%

Year-to-Date:

  • Investment-grade U.S. bonds: 4.36%
  • 10-Year U.S. Treasuries: 5.31%
  • TIPS: 7.68%
  • GNMAs: 2.29%
  • Municipal bonds: 6.36%
  • Corporate bonds: 10.06%
  • High yield bonds: 8.12%
  • International government bonds: 5.80%
  • Emerging market bonds: 15.88%

* Indices used are: Investment-grade U.S. bonds: Barclays U.S. Aggregate Index, 10-Year Treasuries: Citi US Treasury 10 Year Index, TIPS: Barclay US TIPS Index, GNMAs: Barclays GNMA Index, municipal bonds: Barclays Municipal Bond Index, corporate bonds: Barclays Corporate Investment Grade Index, high yield bonds: Credit Suisse High Yield Index, international government bonds: SPDR Barclays Capital International Treasury Bond ETF (BWX), emerging market bonds: iShares JPMorgan USD Emerging Markets Bond Fund (EMB).

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