Spreadbury on what 2012 holds for bonds

BONDS

Ian Spreadbury, senior portfolio manager of the Fidelity Strategic Bond fund, gives his predictions for a challenging year ahead.

To set the scene, 2011 was a truly extraordinary year. Over the past 12 months we have witnessed extreme volatility – particularly in the second half of the year – with some areas of the market moving into uncharted territory.  A few examples spring to mind; firstly, that yields in what might be termed core-government safe haven markets, have hit all time lows, so ten year yields of gilts, German bunds and US treasuries have come down to historic lows of around 2%.  Secondly, we have moved into a period of deteriorating “developed world” sovereign credit quality.  Sovereigns have weak...