The two major influences on overall bond prices are likely to be expectations for changes in the Fed s interest rate policy and in the timing of economic recovery. We believe that the yield curve will eventually flatten again as interest rates rise. There are attractive opportunities among high quality bonds, particularly in corporate and asset-backed securities. It s important, however, to be selective because the potential for more corporate bond defaults and downgrades is high. Accordingly, we re staying with high quality bonds and we are closely monitoring the ability of our current or potential holdings to repay their debts.
Municipal bonds continue to look attractive for taxable accounts.
The yields on municipal bonds are above the after-tax yields that high tax bracket investors would achieve on comparable U.S. Treasuries. We remain confident that a disciplined approach to diversifying with high quality, attractively priced securities is a sound long-term strategy, particularly within the context of an asset allocation that s tailored to client circumstances. Fleet Bank member FDIC Fleet is not responsible for the content of third party sites hyperlinked from this page, nor does it guarantee the products or services offered on third party sites. You should review the privacy statement of a website before you provide personal or confidential information. Fleet is a registered mark of FleetBoston Financial Corporation.