Volatility, Liquidity, Stability, Uncertainty, and Quality
- As pandemic mitigation swept the country, fiscal stimulus and liquidity provided some welcome relief in the deepest contraction since the Great Depression.
- Yet, the confluence of very good performance by risk assets (thanks to the Federal Reserve) and haven assets signaled ongoing deep-seated problems with the economy.
- After a very volatile March and April, municipal bond investors resumed reaching for yield despite constrained supply and looming credit issues.
- We maintain our focus on quality and longer maturities as states and municipalities hardest hit by COVID-19 mitigation face unprecedented challenges. We expect major fiscal pressures will lead to more downgrades than upgrades.
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.