The past week has been an abject lesson of how to get bruised in short order for investors who piled into bond funds this year.
An inverse move was seen as uptick in yields smacked bond prices. Funds that invested in high yield and long maturity issues got hit the worst. Yields on 10 year Treasury Notes hit a peak of 2.23%. This was the highest since April of last year before it slumped down to 2.16% on Wednesday.
The bond swoon in June was a harbinger of things to transpire. The US economy heated up after years of decline that could trigger greater demand for credit and lower bond prices.
Bond yields are among the things to consider. This is because said yields have largely been watered down by the Federal Reserve's bond buying program. The effort was to grow the economy and raise employment since the decline in the 2008 market and credit meltdown. The US economy grew 1.7% in 2011 and 2.2% last year.
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