Fixed income performed well across a broad spectrum of sectors in the third quarter, led by a continued recovery in the high yield space.

Fixed income had a strong second quarter, with most sectors shaking off the volatility of Q1 to turn positive for the year.

The first quarter was characterized by a world wide health crisis caused by the first pandemic in the last 100 years.

High yield bonds outperformed with equities to end the year up 15% (ML US High Yield BB Rated). While longer bonds were down slightly in Q4, they still posted strong gains for the year and outperformed shorter maturities by a wide margin. Treasuries, Agencies, Corporates, and Municipal bonds all performed well against a backdrop of falling rates.

Rates declined in the third quarter, with the ten year treasury yield dropping over 36 basis points to 1.66%. The municipal yield curve inverted on the short end, joining the inverted treasury curve.