Bonds are having their best year since 2020. But don't expect the same returns next year.
The U.S. bond market is set to end 2025 with its best performance in five years, driven by Fed rate cuts, moderating inflation, and a slowing labor market. However, returns in 2026 may not be as strong due to uncertainties in inflation, interest rates, and already fallen Treasury yields. Bonds remain a key part of diversified portfolios for income and stability. Analysts suggest positive returns in 2026, but not as high as 2025.
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