The Federal Reserve's third round of quantitative easing, also known as "QE3" purchases will continue through the middle of 2013. This gives insight into fixed income investing for the coming year. Read the Fed's words for yourself for expectations about the coming year for bond investors:
This is from the Fed's October 24, 2012 press release:
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
Translation: Yields for bonds should stay low, which will support prices for most fixed income funds. You can still consider some of the best bond funds for rising interest rate environments but be sure to do some review first on the different types and categories of bond funds.