Fixed Income (December)
– The Federal Reserve cut its target rate in December another 25 bps, now targeting 3.50-
3.75%. However, longer-term interest rates rose as economic data came in stronger than expectations. Core bonds were modestly negative for the month.
+ There was still an appetite for riskier segments of fixed income, and high yield bonds generated a positive return for the month.
– The move higher in interest rates negatively impacted long-duration assets, which are more sensitive to interest rates.