Duration continued its 2019 outperformance in the second quarter. Longer dated treasury, corporate, and municipal bonds outperformed shorter durations in anticipation of future rate cuts from the Fed and lackluster inflation.

In this letter we discuss 4 different indicators from our Economic Dashboard: inflation, labor, growth, and market. We also look at the FED's policy of Quantitative Tightening (QT) , and projected budget deficits.

The yield curve continued to flatten in the second quarter of 2018; as of 06/29/2018, the thirty-year treasury only yielded 13 basis points more than the ten-year treasury. Duration underperformed in the first half of the year, while some shorter fixed income indices ended the second quarter in positive territory.

The federal funds rate stands at 1.75 (upper bound) after two hikes from the FOMC in the first quarter. Longer dated fixed income securities underperformed as higher rates were absorbed by the market.

Duration performed well in 2017 as the yield curve flattened. Treasury yields rose from 1.21% to 1.88% on 2‐year notes while yields dropped on 30‐year treasury bonds from 3.04% to end the year at 2.74%. The high yield sector outperformed with equities, followed by long municipals, intermediate municipals, and intermediate government and agency paper.

High yield fixed income outperformed with equities in the third quarter of 2017. Long and intermediate municipal bonds were also positive, followed by smaller gains in corporate and government paper.