Company: VBF
Filing Date: 2025-05-02
Form Type: N-CSR
Source: 0001193125-25-111590
Chunk: 0

Company: Invesco Bond Fund
Filing Date: 2025-05-02
Form: N-CSR
Chunk 0
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 when deemed most appropriate. The US Federal Reserve (the Fed) maintained its current level of interest rates, however, their views began to shift to a more dovish monetary policy indicating that the upcoming months would likely be a time of significant central bank divergence with potential for second-half interest rate cuts. Yields continued to see volatility driven by the changing market expectations around the Fed. In the third quarter of the fiscal year, fixed income performance was broadly positive. The US economy showed signs of normalizing with August’s Consumer Price Index falling to 2.5%, a three-year low and a sign of cooling inflation. 1With broad economic data improving, the Fed reduced the federal funds rate by 0.50% in September, its first cut since 2020, which signaled the end of the current rate hiking cycle. Followed by two additional 0.25% cuts in November and December, the target federal funds rate ended the fiscal year at 4.25% - 4.50%. 2The yield curve, measured by the yield differential between two- and 10-yearTreasuries, normalized during the third quarter after inverting in 2023 and 2024. In the beginning of the fourth quarter of the fiscal year, the US economy remained on a solid growth trajectory, outpacing much of the global economy, supported by healthy wage growth, robust consumer spending and positive productivity momentum. However, in the aftermath of the US election, growth expectations shifted with the new US administration’s potential policy changes, particularly around immigration and tariffs, increased economic and market uncertainty. The beginning of 2025 has been characterized by the new US administration swiftly reworking significant segments of the US government while challenging historical assumptions within the geo-politicalsphere. In response to these changes, markets have dampened. Though it is difficult to forecast outcomes, we are constructive on bonds in 2025; we believe potentially slower global growth, though still positive, and that policy uncertainty could be supportive of bonds globally. The Fund, at NAV, generated positive returns for the fiscal year and outperformed its broad market/style-specific benchmark, the Bloomberg Baa U.S. Corporate Bond Index by 23 basis points. During the fiscal year ended February 28, 2025, the corporate bond market benefited from a continuing disinflation trend and resilient economic growth supporting corporate fundamentals, leading to tightening credit

spreads. Because the Fund holds predominantly corporate bonds, it benefited from this broader market environment. Security selection within investment grade corporates, particularly