Yield-starved investors likely will have more to nibble on now through 2018, as the Federal Reserve is widely expected to introduce between four and five interest-rate hikes over the next 13 months.
While the bond markets have been treading through uncharted territory ever since the emergency-reactions to the 2008 financial crisis pushed interest rates to the floor, and piled nearly $5 trillion on the Fed balance sheet, bond experts generally remain cool and collected.
Anne Walsh, who oversees $140 billion in bond portfolios as chief investment officer of fixed income at Guggenheim Investments, expects the Fed to hike in December and then hike four times in 2018.
But she doesn't believe that adds up to an aggressive tightening cycle.
"We're not in the camp that says rates will continue climbing across the rate spectrum," she said. "You will not see much change on the longer end of the curve."
Most forecasts have the Fed's overnight rate at between 2% and 2.25% a year from now, which is described as "closer to equilibrium," by Rick Rieder, chief investment officer of global fixed income at BlackRock, where he is responsible for $1.7 trillion in fixed-income assets.
Mr. Rieder expects the Fed to hike once in December and then three times in 2018, and said fixed-income investors should not expect any significant spike in yields across the board.
Donald Ellenberger, who helps manage more than $52.8 billion in bond portfolios at Federated Investors, said bond investors generally face a low risk of a spike in inflation that could drive rates higher. A greater risk is being overly exposed to certain higher-yielding credit sectors.
"Those are the two things that keep me up at night," he said.
More than 30 years into the fixed-income bull market, the end of the run is always in the back of most bond managers' minds, but Mr. Ellenberger said it's too soon to call this the start of the end of the bond market run.
But with the 10-year Treasury yield now hovering around 2.3%, he does not believe it is going back toward the 1.4% ranges of 2012 and 2016.
What's important to keep in mind about any potential end to the bull market in bonds, he said, is that higher rates can drive down bond prices, but don't always equate to lower total returns.
"As long as rates rise gradually and not too much, bond investors can still make money if coupon income exceeds price declines," Mr. Ellenberger said.
In addition to a gradual Fed tightening cycle on the horizon, bond fund managers also recognize the realities of a new Fed chairman in Jerome Powell, who will replace current Fed Chairwoman Janet Yellen in January.
A few wrinkles on that scheduled transition include Ms. Yellen's announcement that she will step down from the board once Mr. Powell is sworn in, completely removing her influence from the Fed.
The other factor is a reported consideration of adding Allianz chief economic adviser Mohamed El-Erian as vice chairman of the Federal Reserve Board.
Like most observers, Gary Zimmerman, managing partner of Six Trees Capital and founder of MaxMyInterest, doesn't expect a Fed guided by Mr. Powell will alter the near-term direction of rates, but he does like the shift away from academics and toward practitioners.
"Unlike most Fed chairs, Jerome Powell doesn't have an academic background, and Mohamed El-Erian has a unique combination of skills as an economist with a deep international background," Mr. Zimmerman said. "You would have a hard time finding a better choice than El-Erian to pair with Powell, especially coming out of this unprecedented period when monetary policy has been carrying the weight in the absence of fiscal policy."