2018 Quarter 1 Review: Individual Tax-Exempt Portfolio
Key US fixed income indexes declined during the quarter, as interest rates rose, credit spreads widened and bond yields hit four-year highs across the maturity spectrum. Municipal bonds followed the broader market, despite expectations for a positive start to the year, which were fueled by a lack of supply and still-solid demand. Credit remained on a downward trend as state and local municipalities continued to struggle to meet long-term pension debts. Shorter maturity, lower-rated bonds outperformed as yields sold off across the yield curve. Additionally, higher-credit-quality (AAA- and AA-rated) bonds underperformed during the quarter relative to lower-quality (BBB-rated) bonds.
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