Overview
| Objective | Seeks total return through current income and, secondarily, capital appreciation. |
|---|---|
| Strategy | Invests primarily in a broad range of government and investment-grade corporate bonds and other fixed-income securities. |
| Fund Manager | The Fund is managed by the Fixed Income Team, a group of senior-level investment professionals who average 29 years of experience. |
| Risk/Return |  In general, greater returns are associated with greater risks. |
Fund Statistics
| Inception Date | 12/12/94 |
|---|---|
| Ticker Symbol | CFBNX |
| Cusip | 200626208 |
| Minimum Initial Investment | $1,000 |
Commentary
A broad selloff in the bond market defined the third quarter of 2026, driven by geopolitical energy shocks, escalating capital demands by both public and private sectors, and a pivotal Federal Reserve (Fed) rate hike. Still, the economy remains robust, with full-year Gross Domestic Product (GDP) projected at 2.20%.
Following a summer of energy price volatility, the Fed raised the federal funds target range by 25 basis points to 3.75%–4.00% at its September meeting. Federal Reserve Chair Warsh cited a resilient economy experiencing persistent personal consumption expenditures (PCE) inflation above 3.00% with stable unemployment as supportive of higher rates. The Fed remains focused on anchoring price stability and mitigating future inflation risks.
In the third quarter, the Treasury yield curve had its biggest upward shift since 2023, shaped by intense competition for capital across the economy. Heavy federal debt issuance collided directly with massive private-sector borrowing needs—particularly corporate debt issuance required to fund capital expenditures related to the artificial intelligence infrastructure buildout. The two-year Treasury ended the quarter at 4.89%, while the ten-year Treasury yield rose 82 basis points to 5.29%, reaching its highest level since the 2008 financial crisis.
Against this challenging interest rate backdrop, the Commerce Bond Fund returned -3.62% for the third quarter, modestly underperforming the Bloomberg Aggregate Total Return Index, which returned -3.51%. The Fund’s allocation to mortgage-backed securities detracted from performance as the Fed’s action spiked yields and interest rate volatility. In contrast, the Fund’s allocation to shorter-duration asset-backed securities contributed positively to performance.
Looking ahead, the consumer continues to contribute inflation-adjusted growth to the economy, complemented by ongoing corporate investment in artificial intelligence projects. Modest job growth and a stable unemployment rate are expected for the remainder of 2026. However, persistent inflation above the Fed’s 2.0% target is likely to keep the Fed on alert for the possibility of an additional rate hike before year-end.
Holdings and allocations shown are unaudited, and may not be representative of current or future investments. Holdings and allocations may not include the Fund's entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.