Some Bumps in the Road for Corporate Bonds.

The U.S corporate bond rally, which has provided a return of 17 percent in 17 months, is running into head winds. Slow gain in jobs, rising oil prices, the uncertainty of the presidential election, the high valuation of the market, rising market volatility and the threat of terrorist attacks are all likely to be a drag on returns in coming months in 2004. Of course, a climb in U.S. Treasury Interest rates would also be a threat to the corporate bond market. But the Treasury market is confounding the prognosticators, just as it did in 2003.