Summary
- As the Fed steps away from being the largest buyer of longer-maturity Treasuries, new buyers will have to step in to fill this void, which may lead to continued volatility in longer-term U.S. Treasury rates.
- Amid the recent spike in rates, the volatility of lower-coupon bonds increased as some bonds became subject to de minimis tax implications—a negative tax consequence as their prices fell below 100 rapidly.
- In our opinion, active professional management should continue to add meaningful value and outperformance versus passive strategies.
For further details see:
Municipals: The Fed Has Spoken Loud And Clear