Treasury yields, while low in a domestic historical context, remain relatively high compared with other major international government bond yields.

Municipal bonds have started 2016 on a strong note, despite lagging Treasuries.

The speed and magnitude of the decline in the 10-year Treasury yield witnessed in recent weeks is very rare and usually in response to stock market stress.

During periods of significant downgrades, bond markets often adjust in advance. A look back at two prior episodes may reveal what investors can expect. Uncertainty over the timing and magnitude of energy downgrades could cause continued pressure on corporate bonds despite compelling valuations for longer-term investors.

High-yield bond price declines have been exacerbated by rising default expectations, which we believe may have gone too far. The fear prevalent in the high-yield market may have created a unique opportunity for those who can tolerate near-term volatility until fundamentals return to the forefront.