The bond market highlight for the quarter was the positive reaction of corporate bonds that resulted from the Fed's moves. Corporate bonds dramatically outperformed their Treasury counterparts because the monetary easing reduced perceived credit risk. Corporates staged a significant rally during January and held on during February and March to nearly double the performance of the Treasury market. The low two-year Treasury yield level suggests that more Fed easings are in store. Although the corporate bond market has outperformed the other broad bond market sectors in the first quarter, we remain confident that the excess yields available in this sector continue to favor holding an overweighting in corporates relative to Treasuries.
Past performance is no guarantee of future results.
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