Thanks in large part to approved vaccines, the fixed income market managed to navigate worsening COVID statistics, a contested election and an uncertain fiscal stimulus package. This “risk-on” rally was apparent in many markets and not just the fixed income arena. Stocks and commodities made heady gains, while interest rates started to creep higher. Our managers were cautious with regard to higher yields; the first sector to feel the move was the U.S. Treasury market, as the curve steepened on optimism surrounding the return to a more normal functioning society. Treasuries within the index finished down 83 basis points, while the other sectors finished above water. This helped the Bloomberg Barclays Aggregate index to gain 0.67% in the quarter. The Barclays Intermediate Govt./Credit Index finished about 20 basis points behind at 0.48% in a mediocre quarter for fixed income returns. Corporate bonds of all stripes were the standout performers this quarter as investors clamored for yield while maintaining liquidity.

Read the full newsletter here: INVESTMENT OUTLOOK Q4 2020