Yes, the bond market does like "bad news" because bad news oftentimes means lower interest rates. Bond values move in the opposite direction of rates. Lower rates, higher bond values. This is what HAS happened. Status quo = all is good for the most part, but once rates go up...??? Problem with bond funds is that, compared to individual bonds, they don't mature at par! I wouldn't want to initiate a position in this fund right now. How much of this fund's total return is made up of capital gains (as a result of declining interest rates) compared to the income that is earned on its underlying holdings?