March 31st, 2016
The bond market once again showed its resiliency as the Barclays Aggregate Index gained just over 3% during the quarter. This solid performance came as a surprise to many (including this author), as Treasury yields drifted sharply lower in the first two months of the year as the “risk-off” trade gained steam on global growth concerns. Negative interest rates in parts of Europe and Japan dampened sentiment in the U.S. risk markets while fueling buying of our relatively attractive yields. One of the ramifications of all this buying was the belly flattening to long-end of the curve, which greatly benefited accounts with longer/higher durations.