Steeper Curve, Record Liquidity, and Robust Growth Prospects
The Bloomberg Barclays U.S. Aggregate Bond Index, comprised of a broad range of fixed income securities, had a 3.37% negative return—its worst quarterly performance since Q3 1981. The corporate sector dropped 4.65%, but with spreads modestly tighter, still had a positive excess return. The Bloomberg Barclays U.S. Treasury Index fell 4.25%, its worst quarter since Q3 1980. (The long Treasury index was down 13.51%.)
In the tax-exempt market, many investors, particularly those in high-tax states facing even higher taxes, continued to stretch for yield from riskier credits despite limited supply and anticipated stronger economic growth thanks to record stimulus and pandemic mitigation. Municipal/Treasury ratios became even more expensive and quality spreads continued to tighten.
The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.
All investments carry a certain degree of risk, including possible loss of principal.
Past performance is not indicative of future results.