During the fourth quarter, events that historically would have sent the municipal bond market into a tailspin actually paved the way for a strong start to 2018. During the month of December, as tax reform made its way through Washington, municipal issuers were actively issuing bonds to avoid being shut out from the market in the new year.
The overall positive tone for fixed income spread sectors continued into the fourth quarter with short-lived bouts of increased volatility in October and November. Challenges to the status quo included continued geopolitical tensions and the turbulent political climate in Washington, D.C. During the quarter, the U.S. dollar remained weak and oil prices moved higher. In a long-elusive legislative win for President Trump, an extensive tax reform package was passed.
Dave Albrycht, President and Chief Investment Officer of Newfleet Asset Management, was featured on CNBC to discuss his outlook on the bond market and potential alpha drivers in the year ahead.
Newfleet presents its 2018 broad fixed income market outlook and specific outlooks for Bank Loans and High Yield. Team members discuss opportunities and areas of concern across the various sectors in which Newfleet invests.
The environment remained favorable for fixed income markets, especially spread sectors, in the third quarter. Heightened tensions over North Korea, political turmoil in the Trump White House, and weather disasters such as Hurricane Harvey challenged the positive tone and introduced modest volatility, but did not alter the market’s upward trajectory. The Federal Reserve put off a third rate hike in September but announced the start of its balance sheet reduction plan.
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