Bonds are heading for the best year since 2020

Group 1 - The Federal Reserve has been cutting interest rates, which has positively impacted the bond market, with hopes for further cuts due to slowing job growth and consumer spending [1][7] - The Bloomberg U.S. Aggregate Bond Index has returned approximately 6.7% in 2025, indicating a strong recovery from the historically poor performance in 2022 [2] - Investors are experiencing a more favorable environment for bonds in 2025 compared to previous years, with returns outpacing those of short-term T-bills [3][4] Group 2 - Treasury yields have decreased, with the yield on the 10-year note falling by nearly half a percentage point to 4.147% this year, contributing to the attractiveness of bonds [8] - The U.S. government's budget deficit remains a concern, with a deficit of $1.8 trillion for the 2025 fiscal year, which could influence bond market dynamics [14] - The additional yield for holding investment-grade corporate bonds over Treasurys has recently increased slightly to 0.83 percentage points, indicating a potential shift in market sentiment [13]