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How Long Will the Bond Rally Last?

  • High-grade issuers likely to sell $20-25 billion next week
  • Bank of America sees inflows to blue-chip funds continuing

Corporate credit staged a stellar rally this past week, pushing spreads and yields lower and helping spur billions of dollars worth of inflows into bond funds. The question on the minds of money managers, though, is how long will it last?

A stronger-than-expected jobs report on Friday that sent the unemployment rate to a five-decade low could mean that the Federal Reserve will continue to raise rates more aggressively to help cool off the economy and tamp down inflation, which would put renewed pressure on corporate credit.