Long municipal bonds continue to outperform U.S. Treasuries and corporate bonds. Junk bonds, highly correlated with the equity markets, were down for the quarter and lag long municipals by over 6% YTD.
After sending the market lower in May, the bond market reversed course when the Fed announced they would not reduce their asset purchases in September as expected.
High yield outperformed all other fixed income markets last quarter as the Fed’s zero interest rate policy forced investors into riskier assets in search of higher yields.