US bonds decline amid rate cuts: what investors need to know

US bonds have experienced negative returns even as the Federal Reserve initiated rate cuts starting in September 2024. This downturn is attributed to investor concerns over potential government overspending, rising inflation, and the prospect of prolonged higher interest rates. Interestingly, while bonds have struggled, equities have rallied, highlighting a negative correlation between these asset classes. This divergence underscores the importance of diversification, as the contrasting movements can help mitigate overall portfolio risk. Understanding these dynamics is crucial for investors...