This commentary reviews the previous quarter and discusses our outlook and investment approach for the coming months.
- Record municipal issuance, higher US interest rates and concerns over how the new administration’s policies would impact municipal bonds led to a challenging quarter for the municipal bond market.
- 2016’s record level of new issue volume was met with strong fund flows for much of the year, before turning sharply negative following Election Day.
- California and Connecticut both approved plans to lower their targeted investment returns in their pension trusts, which represents long term credit positive actions that may increase budget headaches in the coming years.
- We will be closely watching the healthcare, tax reform, and infrastructure developments out of Washington over the next several quarters.
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