Bearing Down on the Best Bond Plays

Donald Quigley of the Julius Baer Total Return Bond Fund is finding the best values in fixed income overseas

Investors have turned a cold shoulder to bonds so far this year. Prices have dropped after numerous economic reports have shown the economy still has legs, sending the yield on the 10-year Treasury note from 4.6% at the start of the year to 4.84% as of Feb. 2. The strong economic numbers are pushing back market forecasts for the Federal Reserve to lower interest rates from early in 2007 to much later in the year, if at all. And some economists think a rate hike might be in the cards if inflation picks up (see BusinessWeek.com, 1/29/07, "The Fed: A Tilt Toward the Tighter Side?").

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